The Loncar Cancer Immunotherapy ETF (CNCR) that launched Wednesday has a precise focus that possibly makes it the most tactical product among all health care-related exchange-traded funds.
The fund tracks the Loncar Cancer Immunotherapy Index, a grouping of 30 companies working on therapies that treat cancer through the body’s immune system. According to fund literature, immunotherapy is a transformational field within the biotechnology space that is expected to become the foundational treatment for cancer during the next ten years because these treatments can be more precisely tailored to fight the disease.
The CNCR fund’s underlying index comprises 30 percent pharma companies with steady revenue and earnings, and 70 percent clinical-stage biotech companies that by-and-large don’t. That’s because most of the latter are still in the drug-development stage and hope to get their products across the finish line in the future.
The top-ten index holdings (as of Sept. 30) included well-known pharma names AstraZeneca, Pfizer, Bristol-Myers Squibb, Novartis and Merck. The top ten also included noted biotech names Celgene and Amgen. The equal-weighted index is rebalanced semi-annually, and carries an expense ratio of 0.79 percent.
“This is a clearly defined, high-growth, very innovate area within biotech that in my opinion is a lot different than other parts of biotech,” says Brad Loncar, developer of his namesake index. “If you’re buying the current biotech ETFs or looking at the current indices out there, you’re getting a hodgepodge whereas some people might be interested just in this specific area.”
Based in Lenexa, Kansas, near Kansas City, Loncar was a former budget manager in the international affairs division at the U.S. Department of Treasury. He has been a full-time biotech investor for eight years, managing money for himself and his immediate family. But he bristles at the notion he’s simply a Regular Joe investor who somehow turned his idea into a publicly traded, open-end fund.
“Biotech is a very research and labor intensive sector,” he says, adding that he regularly attends investment conferences and medical meetings to meet with companies in the space. “To me this is a serious business, and I’m a very respected voice in biotech. Even though I’m not affiliated with a bank or something like that, I don’t think 'retail investor' is an accurate description.”
And neither does ISE ETF Ventures and Amplify Development LLC, both of which are backing Loncar on a venture basis. ISE ETF Ventures, which is operated by ISE Holdings and is a member of Eurex Group, partners with issuers to launch exchange-traded products.
And ditto for Amplify, which is led by ETF industry veteran Christian Magoon. His credits include serving as a consultant to ISE ETF Ventures on last November’s roll out of the PureFunds ISE Cyber Security ETF (HACK), a fund that created a lot of buzz when it launched and eventually shot up more than 30 percent by early summer before tumbling in recent months back to near its inception price.
The CNCR fund’s advisor is Exchange Traded Concepts, a private-label ETF advisor whose turnkey platform helps bring ETFs to market more quickly and less costly than doing it from scratch.
The Future Of Therapy
The Loncar Cancer Immunotherapy ETF isn’t the first cancer treatment-focused fund to ever hit the market. Last decade, XShares operated a suite of 19 HealthShares ETFs with a laser-like focus on specific areas of medicine––such as metabolic-endocrine disorders and orthopedic repair––that went belly up during the market crash. Among that group were the HealthShares Cancer and HealthShares Emerging Cancer funds.