Royalties and cancer treatments: Thematic ETFs take new directions

investmentnews.com:

Investors in thematic funds have an ever-increasingly range of funds to assist diversification and there are now new funds focus on royalty companies and cancer treatments.

Tema ETFs has launched the actively managed Tema Global Royalties ETF and the Tema Oncology ETF, claiming the only ETFs of their kind to be listed in the U.S.

The royalties fund gives investors exposure to a range of global companies that primarily derive their income from royalties, such as those in the commodities, pharmaceuticals, entertainment, and renewables and technology sectors. Companies in these sectors historically see structural growth.

Tema’s CEO, Maurits Pot, says royalties are a differentiator for companies, offering a solution to finance growth that avoids equity dilution, particularly relevant in today’s high financing cost and low financing availability environment.

“For investors they offer structured exposure to difficultly accessible private assets, underlying commodities, and deliver equity-like returns with contractually supported income,” he added. “These benefits are particularly evident in today’s high interest rate environment.”

Tema highlights Bloomberg data that show strong dividend yield for royalty companies and notes how royalties are exposed to the “attractive attributes of their underlying assets while limiting the related risks.”

The new fund is managed by Chris Semenuk, a portfolio manager with more than 30 years of experience.

He says that royalties are expected to become a more prevalent way for companies to access alternative sources of financing due to their tailored and flexible nature.

“Royalties remain a nascent yet fast growing form of financing, which are becoming more relevant in the current high