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This Generic Drug ETF Deserves Consideration Amid Biotech Weakness

Wednesday, October 5, 2016 10:17
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DrugsThere have been dozens of headlines in recent days and weeks concerning the Pharmaceutical industry thanks to the rhetoric coming out of the Clinton campaign about affordability of medications for U.S. citizens.

Stocks like MYL and TEVA have been absolutely bashed for the entire month of September and into early October here, on very heavy trading volume. As this heavy activity occurs not only in the two aforementioned stocks but across the Pharmaceutical space in many respects, this seems like a perfect time to address a niche ETF that surprisingly has not seen more action that it has given the market atmosphere here.

The VanEck Vectors Generic Drugs ETF (NASDAQ:GNRX) (Expense Ratio 0.55%) debuted in January of this year, so it is still rather new to the marketplace and thus likely not well-known among investors at this point, especially judging from its low AUM of $2.4 million and paltry trading volume of 795 shares per day. Given the price pressure that exists in this space lately and the fact that the situation is not likely to resolve itself at any point in the near future, especially if Clinton does win the U.S. Presidential election, it makes sense to keep GNRX on the dashboard from either a long or short standpoint. The fund tracks the Indxx Global Generics & New Pharma Index, and includes eighty individual equities in this space, providing rather broad exposure.

Top holdings consist of two of the names that we mentioned earlier of course, but as we go down the list of top ten weightings within GNRX we see some exposure to lesser known Generic Drug manufactures including several companies that are based overseas and thus the fund owns ordinary shares. The top ten appear as follows: 1) TEVA (7.55%), 2) MYL (6.95%), 3) Sun Pharmaceuticals Industries Ltd. (4.83%), 4) PRGO (4.80%), 5) Lonza Group Ltd. (3.92%), 6) UCB SA (3.89%) 7) ALB (3.54%), 8) Celltrion Inc. (3.38%), 9) MNK (3.30%) and 10) Aspen Pharmacare Holdings Ltd. (2.83%).

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch
paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.

Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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Total 1 comment
  • jesssmart

    Generics have the same quality as brand name drugs. I personally switched to generics 3 years ago. Usually I buy them from . The price for name brand medicine can often be more than twice as much as its generic version, yet they have the same active ingredient. So what’s the reason to overpay, I wonder?

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