ETF Gaining Popularity as a 'Obesity Treatment Drug'

Samsung Asset Management Launches Korea's First 'Obesity'-Focused ETF
Individual Net Purchases Surpass 20 Billion KRW in 7 Trading Days

Samsung Asset Management announced on the 23rd that the 'KODEX Global Obesity Treatment TOP2 Plus ETF,' composed exclusively of global obesity treatment companies and the first of its kind in Korea, recorded net individual purchases of 20.3 billion KRW within 7 trading days after its listing. The current net assets amount to 43 billion KRW.

The KODEX Global Obesity Treatment TOP2 Plus ETF holds Novo Nordisk and Eli Lilly, leaders in obesity treatment, at 25.5% and 26.3% respectively. Novo Nordisk, the largest European company by market capitalization, is a pioneer in the obesity treatment market, famous for ‘Wegovy.’ It recorded a 94% market share last year. Eli Lilly is currently the largest pharmaceutical company globally by healthcare market capitalization. Goldman Sachs predicts that by 2030, Eli Lilly will capture about 50% of the obesity treatment market by leveraging its abundant resources and systems.

The most notable feature of the KODEX Global Obesity Treatment TOP2 Plus ETF is that, besides the TOP2 stocks, it invests equally in 8 other stocks that are currently undergoing clinical trials for obesity treatment approved by the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA). By including companies in clinical stages, it reflects the potential realization of obesity treatment development outcomes. The equal-weight method increases the relative proportion of specialized small and medium-sized enterprises in obesity treatment, which might be overlooked in a simple market capitalization-based approach.

Among the 8 stocks are major pharmaceutical companies such as Pfizer and AstraZeneca, as well as four promising small and medium-sized pharmaceutical companies with high potential growth rates due to expectations of technology exports depending on clinical results. The portfolio includes Zealand Pharma from Denmark, which has already signed a license agreement related to obesity treatment development with the global pharmaceutical company Boehringer Ingelheim, and Viking Therapeutics from the U.S., which recently announced positive comprehensive results from Phase 1 clinical trials for obesity treatment. On the 16th, Viking Therapeutics demonstrated the strength of small and medium-sized pharmaceutical companies by rising 13.7% in a single day amid M&A expectations.

Kim Cheonheung, a manager at Samsung Asset Management, said, “It appears that the number of investors quickly investing in the high-growth obesity treatment market is increasing,” adding, “The obesity treatment market is now in its early stages, and as pharmaceutical companies gradually expand their facilities, smooth supply is expected.”

The KODEX Global Obesity Treatment TOP2 Plus ETF is based on the iSelect Global Obesity Treatment TOP2 Plus index. It consists of 10 stocks, with regular index rebalancing conducted every June and December, and has a total annual fee of 0.45%.