Trends, global drivers and trading strategies – these are the three central premises forming the basis for Swissquote's activities on its "Themes Trading" platform, through which the direct broker has now opened up more than 40 promising themes to investment. In doing so the managers are always keen to respond quickly and effectively to new developments. This intention was also followed in the launch of the Swissquote Pharma Opportunity Index. When the corona crisis began to pick up speed in early 2020, the equity strategies quickly identified that the pandemic represented a perhaps unique challenge and also opportunity for the pharmaceutical sector especially. "The Swissquote Pharma Opportunity certificate invests in the performance of companies actively working on medicines to combat the coronavirus with development of vaccines and medical equipment to test for the virus and treat symptoms," is how the initiators summarise the idea behind this investment product. Just under 15 months since the launch, the results speak for themselves: the index has gained almost three quarters in value since the start. That means the theme selection outperformed the MSCI World Index by nearly 20 percentage points.
A comparison with the global equity market benchmark already makes sense just on the basis that the Swissquote Pharma Opportunity Index also has an international flavour. At present 18 companies have made it through the systematic selection process. With a 43% weighting, US firms are setting the tone. The pharmaceutical pair Novartis and Roche together with the investment company BB Biotech ensure that Switzerland occupies second place on the country rankings. They are joined by virus fighters from France, Great Britain and Asia (see graphic). It is hardly surprising that those firms involved in the development of Covid-19 vaccines have pushed the index up sharply. Moderna, BioNTech and Novavax have posted three-digit price gains in percentage terms since their inclusion. However, the weakest share also comes from this corner: CureVac has dropped more than a third since the index managers added the German company. The vaccine developed by the Tübingen firm has not as yet achieved the hoped-for effectiveness.
The correction of CureVac had little impact on overall performance, which goes to show how sensible it is to have a diversified position in an investment theme that, while highly promising, is not immune to disappointments. What is more, the index does not just cover the vaccination campaign: the benchmark also includes a range of companies which develop and market active agents and instruments for the treatment and diagnosis of coronavirus. While Roche showcases its diagnostic expertise, Novartis is making capacity available for the production of vaccines. At the same time, the group is collaborating with Zurich-based Molecular Partners on an experimental Covid-19 drug. Known as "Ensovibep", in recent in-vitro tests the product proved to be effective against all major virus mutations, including the Delta variant. The researchers expect to see the first results from the phase II and phase III clinical trials at the beginning of 2022.
The examples outlined demonstrate the enormous diversity of the Swissquote Pharma Opportunity Index. The benchmark brings together innovative biotech firms and strong, high-value representatives of the "big pharma" segment. The ever faster-spreading Delta variant in particular shows that the fight against the corona virus is far from won. Looking at the next few months, the key for the pharmaceutical sector will more than ever be to deliver sufficient quantities of vaccines and tests while at the same time driving the search for effective drugs. A further driver could make an appearance in the upcoming reporting season: gradual re-opening should play into the hands of healthcare companies, with treatments cancelled or postponed during the lockdown now able to be provided again. The Swissquote experts, at any rate, continue to be convinced of the potential of this theme. Indeed, given the significance of vaccine business they are even talking of a unique opportunity: "This is a once-in-a-lifetime opportunity to capitalise on a jump in the market that no one could have predicted," the stock market professionals reckon.
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