The population in the U.S. and other developed nations is aging, and the exchange-traded fund world has two thematic funds focused on this trend.
At first blush, both funds seem somewhat similar. The Global X Longevity Thematic ETF (LNGR) is a modified market-cap weighted fund that invests in companies positioned to serve the world’s growing senior population. The Long-Term Care ETF (OLD) from Janus Henderson Investors is a modified market-cap weighted fund investing in longevity and the aging population.
Both ETFs were launched roughly at the same time, with LNGR debuting in May 2016 and OLD in June 2016. But the funds take different approaches to how they invest in the macro demographic trend of an aging population, and that has affected performance.
LNGR is a healthcare ETF, with 92.6 percent weighting in that sector. Real estate makes up 7.2 percent. It has 97 holdings, with AbbieVie the top holding at 4.3 percent of the fund. Celltrion is second at 4.1 percent and Novo Nordisk is third at 3.8 percent. Breaking down the healthcare sector a little further, biotechnology and healthcare equipment have the greatest weighting, at nearly 68 percent. Seventy percent of its assets are in the U.S., with 19 percent in Europe.
LNGR has a 50-basis point management fee and $9.36 million in assets under management. Its one-year return is up 31.64 percent and it’s up 6.53 percent year-to-date. It outperformed the health care sector in 2017, which was up 21.7 percent.
Jay Jacobs, vice president at Global X, says the LNGR fund focuses on products that would enable longevity and the companies that would benefit from that, which is why biotechnology and pharmaceutical companies dominate the fund.
“A lot of these companies involved in biotech/pharma will be growing rapidly and be the dominant companies in the health care sector going forward,” he says.
Real Estate
OLD focuses on real estate, with 69 percent of the fund in that sector and 26 percent in health care. It has 43 holdings, and the top three include Ventas at 18.8 percent, Welltower at 18.7 percent and Orpea SA at 5 percent. The bulk of its assets are in the U.S. at 79.6 percent, with 9.4 percent in Europe.
The fund’s one-year return is down 0.6 percent, and year-to-date it is down 3.55 percent. That lagged the real estate sector’s performance 10.7 percent in 2017. OLD has a 50-basis point management fee and $9.21 million in assets under management. It has a yield of 3.95 percent (versus a paltry 0.75 percent yield for the LNGR fund, which is less invested in yield-generating securities).