HRTS name was updated to Tema GLP-1, Obesity & Cardiometabolic ETF. HRTS was the world’s first ETF investing in GLP-1 and weight loss drug trend. We updated the name to clarify the fund's previously scientific name and its objectives. Like all healthcare ETFs at Tema, the HRTS fund set as its universe and fund name a major diseases area – obesity and cardiometabolic. This blog post describes how HRTS allows investors to invest in GLP-1 weight loss megatrend while capturing the entire investment opportunity set, across small and large companies in the space. A set that is defined by an evolving innovation and treatment paradigm, starting with GLP-1.
There are an estimated 1.6bn obese and overweight individuals globally, a figure set to reach almost 2.2bn by the end of the decade[1]. Obesity is well understood as the root cause of many chronic diseases from cardiovascular diseases to diabetes. HRTS invests in companies addressing this major healthcare challenge through innovative therapies and devices.
Most prominent among these are the GLP-1 medications like Ozempic/Wegovy and Mounjaro/Zepbound[2], which broke through in 2019 as the first drugs to reach double digit weight loss, a gold standard previously reserved for highly invasive bariatric surgery. These medications have since shown clinical benefit in cardiovascular outcomes with a 20% reduction in the risk of major cardiovascular events. This, along with evidence of benefit in liver, kidney and other diseases, has led to continual upgrades of future obesity medication market size, currently expected by Goldman Sachs to reach $130bn by 2030.
GLP-1 medicines initially triggered a selloff in certain healthcare companies that investors believed could be disrupted. For example, companies working in the continuous glucose monitoring and insulin delivery device space saw sharp share price falls. Our analysis showed that these concerns were misplaced and that these devices would not be displaced and in fact work even better with diabetic patients on GLP-1s. We took advantage of the valuation opportunity providing an early win for the fund.
Although GLP-1s are, and will likely remain, the backbone of the evolving obesity treatment paradigm, this is a rapidly innovating field. New approaches range from targeting other gut hormones, like amylin, to novel targets and even gene editing. We firmly believe obesity is a complex and heterogenous disease requiring an equally complex and heterogenous set of treatments and, for investors, company stocks to buy.
Cardiometabolic disorders themselves are also wide and varied, involving diseases that GLP-1s can’t address. Examples include TTR-amyloidosis, hypertrophic cardiomyopathy and aortic stenosis – all major health challenges and large commercial opportunities.
In summary, HRTS was the first ETF investing in GLP-1 and weight loss encompassing in both name and investment approach, the major diseases area obesity and cardiometabolic.