Weight-loss drug ETF bets big on Eli Lilly and Novo Nordisk

A major provider of exchange-traded funds is betting on the long-term popularity of GLP-1 weight-loss drugs.

Roundhill Investments’ GLP-1 & Weight Loss ETF (OZEM), which began trading last week, combines leaders Elie Lilly And Novo Nordisk with players developing new treatments for weight loss and diabetes. CEO Dave Mazza said his company is capitalizing on the sector’s explosive growth potential.

“The ability to have active management to overweight companies that are actually in the market producing the drugs and then identify those that are in particular phases is powerful,” Mazza told CNBC’s “ETF Edge” last Monday .

Eli Lilly and Novo Nordisk each hold about a 20% weighting in the ETF, according to Roundhill’s website Friday. The next three largest positions are Zealand Pharma, Amgen And Chugai Pharmaceuticaleach of which has a weighting of less than 5%.

Over the past year, Eli Lilly is up 90%, while Novo Nordisk has gained 68%, as of Friday’s market close. Mazza dismissed concerns that investors may have missed the rally, emphasizing that the weight-loss drug industry is still in its “early stages.”

“The market has a lot of room to grow with other companies coming in, whether it’s more powerful drugs or products where you don’t need an injectable.”

He also sees GLP-1 drugmakers following a similar trajectory to AI stocks.

“It’s a bit like thinking about Nvidia with AI. They’re just ahead of the curve,” Mazza said. “(Eli Lilly and Novo Nordisk) focused a few years ago on diabetes and weight loss drugs, were able to enter the market and produce remarkable results.”

Following last Tuesday’s launch, shares of Roundhill’s GLP-1 & Weight Loss ETF finished the week down almost 2%.