VanEck launches bionic engineering ETF in Europe

VanEck has launched its second healthcare-focused thematic equity ETF in Europe this year with the latest fund targeting companies specializing in bionic engineering.

The VanEck Bionic Engineering UCITS ETF has been listed on London Stock Exchange in US dollars (CYBO LN) and pound sterling (CYBG LN) as well as on Deutsche Börse Xetra in euros (CIBO GY).

The fund becomes the first thematic ETF in Europe to specifically target the bionics industry.

Bionics refers to the application of biological methods and systems found in nature to the study and design of engineering systems and modern technology.

In the context of healthcare, bionics represents technologies that have been designed to enhance or restore functions of the human body. Examples of bionic engineering include prosthetics, bio-printed tissues, replacement organs, and body function aids.

Commenting on the importance of the bionics industry, Martijn Rozemuller, CEO at VanEck Europe, said: “The proportion of the elderly population is rising and with it, the demand for technical solutions such as hearing and visual aids, pacemakers, artificial joints, and the like that improve the quality of life in old age. At the same time, increasingly available bionic tools are helping people with chronic diseases such as diabetes or functional disorders.”

“As the technology develops, we expect the applications based on functions of the brain and nerve systems to become more prominent,” added Dominik Schmaus, Product Manager at VanEck Europe. “Bionics also have the potential to disrupt healthcare with innovations like neuro-prosthetics enabling the treatment of Alzheimer’s and other cognitive diseases as well as direct brain-to-device communication for paralyzed people.”

Methodology

The ETF tracks the MVIS Global Bionic Healthcare ESG Index which selects its constituents from a universe of developed market stocks with market capitalizations above $150 million and average daily trading volumes greater than $1m.

Companies that have violated international norms, are involved in controversial weapons, or derive significant revenue from civilian firearms, tobacco, gambling, coal mining, oil sands, fossil fuels, and nuclear power are removed from the selection pool.

The methodology then screens for companies operating in the healthcare sector that generate at least 50% of their revenue from bionics-related activities such as medical, dental, and visual implants, bioprinting, prosthetics, and organ and tissue preservation.

Firms that manufacture implantable or wearable devices or materials used only for cosmetic purposes will not be eligible for inclusion.

The index consists of the largest eligible companies while targeting at least 90% of the float-adjusted market capitalization of the screened universe subject to a minimum of 25 stocks.

Constituents are weighted by float-adjusted market capitalization with any single stock capped at 10%. Rebalancing occurs on a quarterly basis.

As of 7 December, two-thirds (65.9%) of the index weight was allocated to stocks from the US with the next-largest country exposures being Switzerland (9.9%), Ireland (8.7%), the UK (3.8%), and Australia (3.2%).

The top three largest positions were Dexcom (12.9%), a specialist in glucose monitoring systems for diabetes management; Stryker (10.9%), which manufactures a broad range of orthopedic and neurotechnology implants; and Medtronic (8.7%), best known for its cardiac devices and insulin pumps. Other notable positions included Zimmer Biomet (7.7%), Edwards Lifesciences (7.7%), Sonova (5.5%), and Insulet (5.2%).

The ETF comes with an expense ratio of 0.55% and is classified as an Article 9 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).

Income is accumulated in the portfolio.

VanEck previously launched another thematic healthcare ETF in Europe in September targeting two cutting-edge industries: genomics and digitalization. The VanEck Genomics and Healthcare Innovators UCITS ETF (CURE LN) has a lower expense ratio of 0.35%.