The Organics ETF, which carries the ticker ORG, seeks to capture an ongoing trend in the U.S. by investing in the production and sale of organic products.
“This is my favorite of the new ETFs because there’s an impact investing component involved,” Cherney says. “This is an area that people are very passionate about. People are paying a premium because they believe that organic products are better for the environment, for laborers and for consumers.”
Janus notes that sales of organic products in the U.S. have increased tenfold over the past 17 years.
The Obesity ETF, which carries the ticker SLIM, seeks to capture the obesity epidemic by investing in companies designing and selling products related to weight loss and diseases with comorbidity to obesity, such as diabetes, hypertension and sleep apnea.
“If you go through the CDC’s data, there are a cluster of diseases related to obesity,” Cherney says. “Health care providers, pharmaceutical companies and medical device companies make up the majority of the index.”
Janus notes that more than 10 percent of men and 14 percent of women are now classified as obese worldwide.
The ETFs are based on indexes using a modified market-cap weighting scheme — because massive companies like Whole Foods, Ventas, Nike and NovoNordisk could dominate smaller-capitalization constituents, they’re limited to 25 percent of any particular fund.
Nevertheless, some of the ETFs are highly concentrated, for example, more than 38 percent of SLIM is invested in two companies, NovoNordisk and Fresnius Medical Care. Nearly 22 percent of ORG is invested in Whole Foods.
The ETFs are overseen by the Janus Exchange Traded Products Team and are not actively managed. All four of the funds carry expense ratios of 50 basis points.
Cherney said that advisors could use the new ETFs as satellite holdings in client portfolios to capture the growth of health and fitness related companies as the global population ages and becomes more health conscious.