HealthShares, which earlier this year shut down 15 of its exchange-traded fund portfolios, has relaunched the surviving four ETFs, with an expanded list of stocks in each fund.

Previously, all of the equal-weighted ETFs had 22 stocks. It was a concentrated investment approach that the funds' advisor, XShares Advisors, decided to move away from at the same time that it shut down the 15 niche funds (see related story.)

The four relaunched ETFs are: HealthShares Cancer (NYSE: HHK); HealthShares Diagnostics (NYSE: HHD); HealthShares Drug Discovery Tools (NYSE: HHV); and HealthShares European Drugs (NYSE: HRJ).

Each now features between 28 and 35 stocks. The company says its goal was to find a better balance between a concentrated approach to health care investing and diversification.

Market Cap Sizes Go Up

The biggest change in the underlying index methodology is in the minimum capitalization requirements. Stocks must have a market cap greater than $100 million and less than $15 billion for at least two of the three preceding quarters.

At the time of index reconstitution, the stocks must now also have had a three-month average daily trading value of at least $1 million. Furthermore, therapeutic companies must be listed in either the MedTrack (medtrackservices.com) or BioCentury (biocentury.com) databases. Or if they are not pure-play therapeutic companies in the indexes, must meet a minimum requirement in terms of therapeutic products and clinical trials relative to overall business and research initiatives.

The expense ratio for all four funds has also been lowered in an attempt to drum up more assets:

In a nutshell, HHD has the largest group of stocks being added, with 13 new holdings. It also has had the most assets ($20 million), and second-worst performance (only European-focused HRJ has been down by more in the past one year), according to Morningstar data through yesterday.

It also is the only ETF to have overlap in terms of new holdings with one of the other ETFs. HHV has also added Ariad and Cytokinetics.

(New sector weightings for each ETF were not immediately available from the funds' advisor.)

The new stocks being added to HHK are:

• Ariad Pharmaceuticals
• Chugai Pharmaceuticals
• Cytokinetics
• Enzon Pharmaceuticals
• Exelixis
• Geron Corp.
• Ligand Pharmaceuticals
• Nektar Therapeutics

The new stocks being adding to HHD are:

• Abaxis
• Affymetrix
• AMAG Pharmaceuticals
• AngioDynamics
• Enzo Biochem
• Given Imaging
• Merit Medical Systems
• Neogen Corp.
• Nighthawk Radiology Holdings
• Quidel Corp.
• SonoSite
• TomoTherapy
• TOPCON Corp.

The new stocks being adding to HHV are:

• Ariad Pharmaceuticals
• Cytokinetics
• I-Flow Inc.
• Mannkind Corp.
• Obagi Medical Products
• Vital Images

The new stocks being added to HRJ are:

• BTG
• Elan Corp.
• Eurand N.V.
• MediGene AG
• MorphoSys
• NicOx SA

The equally weighted portfolios weight individual names as follows:

• HHK: 3.13%
• HHD: 2.86%
• HHV: 3.33%
• HRJ: 3.57%

Whether the changes will increase the use of the funds by investors is an open question. The advisory company has also been going through an extended management reshuffle, with an interim CEO still running the shop (see story here.)

The company has plans for new advertising on sites including Bloomberg.com to increase exposure for the funds and highlight the changes and lower expense ratios.

The current asset bases for the funds are:

• HHK: $10 million*
• HHD: $20 million*
• HHV: $10 million*
• HRJ: $2 million*

*Morningstar, 10/20