“I think where cancer development is now versus 10 years ago is like day and night,” Loncar says. “For decades, improvements in cancer care have been incremental. What’s happening now is that immunotherapies are revolutionary breakthroughs, so having a cancer fund now is a very different situation.”
Biotech is a broad area targeting many different diseases, but some existing ETFs––such as the BioShares Biotechnology Clinical Trials Fund (BBC)––take a more narrow approach than funds following more expansive biotech-related indexes. Loncar says his index is even more defined.
“When you look at an overlap from a weighted basis, the companies in my index make up 17% of the BBC index, and 18 of its 30 holdings,” he says.
“A cancer company’s business model and the way it’s valued by the market is completely different than a company that’s developing an antibiotic or a drug for a rare disease,” Loncar adds, noting he sees his index, and the fund that tracks it, as being “overweight on therapies for the future that will change cancer therapy for the better.”
Given the CNCR fund’s very specific focus, along with the potentially volatile nature of clinical-stage biotech companies, investors should view this as a tactical holding to complement core portfolio holdings. “It certainly could fit in the alpha-generating position in a portfolio,” says Garrett Stevens, CEO of Exchange Traded Concepts.