Two new weight-loss exchange-traded funds (ETFs) launched in May have yet to whet investors' appetite, possibly due to🍃 their expensive fe💜es and concentrated bets.

The Roundhill GLP-1 & Weight Loss ETF (OZEM) and the Amplify Weight Loss Drug & Treatment ETF (THNR) were both launched May 21 to capitalize on the craze for 澳洲幸运5官方开奖结果体彩网:obesity drugs. However, the funds have failed to attract large investments, with Roundhill's total assets currently at $29 million, while Amplify has pulled in just $2.3 million.

High Expense Ratios, Narrow Exposure

The first problem for the new weight-loss drug ETFs has been a relatively high 澳洲幸运5官方开奖结果体彩网:expense ratio of 0.59% for both. In comparison, the iShares US Healthcare ETF (IYH) has an expense ratio of 0.40% and boasts total assets of $3.3 billion.

Another issue has been the concentrated nature of the weight-loss ETFs, both of which are heavily exposed to two companies: Eli Lilly (LLY) and Novo Nordisk (NVO).

The two companies for now are the only ones with a license to supply GLP-1 drugs for weight loss under the brand names Zepbound and Wegovy. Therefore, the Roundhill ETF currently has a concentration just greater than 41% in Eli Lilly and Novo Nordisk together, compared with about 30% for the Amplify offering. A senior research analyst at Morningstar told the Financial Times ꦚthat investors will question why they should pay an annual fee of 0.59% to effectively own two stocks.

Continued Obesity-Drug Market Growth Seen

Data from research firm IQVIA said there are currently more than 80 assets for weight loss treatment in clinical-stage trials. The company also said global obesity spending was nearly $24 billion in 2023, marking seven-fold growth in three years. The market is also expected to grow by a 澳洲幸运5官方开奖结果体彩网:compound annual growth rate (CAGR) of 24% to 27% through 2028.

Shares in Eli Lilly have almost doubled over the las▨t year, while Novo Nordisk stock is up about 80% over the same period.