In the scramble to develop a Coronavirus vaccine, genomics investments are receiving renewed attention and rewarding investors in the process. Those sentiments are applicable to the Global X Genomics & Biotechnology ETF (GNOM), which is higher by more than 52% in the current quarter.
GNOM tracks the Solactive Genomics Index and “seeks to invest in companies that potentially stand to benefit from further advances in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics, and biotechnology,” according to Global X.
Genomics companies try to better understand how biological information is collected, processed and applied by reducing guesswork and enhancing precision; restructuring health care, agriculture, pharmaceuticals, and enhancing our quality of life.
Every living organism, including virus, has its own set of genomes and because a virus like COVID-19 has genetic sequencing, some companies residing in GNOM are relevant when it comes to combating the respiratory illness.
Why It's Important
With scientists racing to find a vaccine for the coronavirus, health care, and biotechnology have been hot sectors this year. Yet, as investors try and pick a winner from the rapidly increasing group of companies that are entering the competition, a collection of biotechnology and other, more targeted exchange-traded funds that contain some of the key names in the vaccine race are delivering impressive returns.
“Genome sequencing reveals the genetic makeup of organisms like humans, or even bacteria, by identifying the building blocks (nucleotides) that make up genetic material (DNA) and the order in which they appear,” said Global X analyst Andrew Little in a recent note. “Sequencing can also be conducted on viral genomes like that of SARS-CoV-2. Viruses are non-living strands of RNA, so these sequences look at RNA rather than DNA.”
GNOM components are only eligible for inclusion if they generate at least 50% of their revenues from genomics related business operations. The index is market cap-weighted with a single security cap of 4.0% and a floor of 0.3%.
“Next generation sequencing (NGS) reads millions of DNA fragments simultaneously and requires no prior knowledge of the genome, lending itself well to identifying new pathogens,” writes Little. “Researchers employed Illumina and Nanopore NGS to read SARS-CoV-2’s genome and computational genomic applications like QIAGEN’s CLC software to map and sequence it.”
Illumina is a top 10 holding in GNOM at a weight of almost 4%.