First Vaccine ETF Should See Halcyon Days Ahead

There was big news on the coronavirus vaccine front Monday when Pfizer PFE and BioNTech BNTX said their vaccine delivered an impressive showing in Phase 3 trials.

What Happened: Alone, that news should have been a boon for exchange-traded funds such as the ETFMG Treatments, Testing and Advancements ETF GERM.

GERM, which follows the Prime Treatments, Testing and Advancements Index, debuted in June as one of the first in a wave of ETFs with leverage to the coronavirus pandemic. Home to 63 stocks, GERM's start is solid as highlighted by $53.31 million in assets under management.

Why It's Important: While GERM disappointed on Monday, it's undoubtedly tethered to the success of BioNTech's and Pfizer's BNT162b2 vaccine. BioNTech accounts for 7.8% of GERM's weight, making the stock the largest holding in the fund. Pfizer is also on the ETF's roster.

“Vaccines will provide the quickest path forward to return our lives to the 'new normal,'" said Dr. Rey Panettieri, MD, Professor of Medicine, Vice Chancellor for Translational Medicine and Science at Rutgers University and partner to GERM.

Panettieri notes a vaccine could be approved in December or in the first quarter of 2021 and that single-dose vaccines are preferable. That could open the door for some other GERM components to make headway against BNT162b2 because multiple doses are required.

Obviously, GERM is in the spotlight because of COVID-19, but like some of the other ETFs born out of the pandemic, it has potential staying power.

“From Jan. 2011 to Jan. 2018 there were 36 epidemic events in the U.S. alone,” according to issuer ETFMG. “New reports indicate the value of the global human vaccines market is expected to grow to $72.5 billion by 2024, representing a CAGR of 11.2% from 2016 to 2024.”

What's Next: Scores of GERM holdings, including Moderna MRNA, are working on competing products to what could be offered up by Pfizer and BioNTech, potentially providing the ETF with some latitude for upside as more trial updates trickle in.

As it stands, the ETF is already a hit among at least one set of investors: millennials.

“Millennials have noticed  GERM and are investing heavily in this hot ETF, judging by the accounts investing from the Robinhood app--which is almost 5000 accounts and counting, according to www.robintrack.net,” notes ETFMG. “Millennials invest in what they know, and realize the impact that COVID-19 has on the biotech space and the potential for growth.”