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Home > Introduction > Articles > Pearl Chin > Is the Nanotechnology ...

Is the Nanotechnology Index (NNZ) just a bunch of bull? By Pearl Chin - Managing General Partner, Seraphima Ventures

In April 2004, Merrill Lynch launched the Nanotechnology Index (NNZ) to be quoted intraday by the American Stock Exchange. First Trust also launched a Nanotechnology mutual fund, FTNATX, this past March 2004. There is already a Munich and Luxembourg based Nanotech mutual fund launched Nov. 2002 and Sept. 2003, respectively. However with the advent of Merrill Lynch into the fray, it validates Nanotechnology in the investment community. So the investment companies are finally hopping on the nanotech bandwagon.

In their Technology Strategy updates on nanotechnology, Merrill Lynch says the criteria by which they choose companies to be on the NNZ index is that the companies must indicate in public documents that nanotechnology initiatives represent a significant portion of their future activities. There are currently 24 companies in their index but they admit they will rebalance the list quarterly. It is unfortunate that giants such as IBM, DuPont and HP who do a significant amount of nanotech research are not included using those qualifications. In addition, Flamel, listed on the NNZ, is not the only publicly traded bio-nano company just like Veeco on the NNZ list is not the only publicly traded instrumentation company that supplies the nanotech research community.

However, there are many nanotech companies that don't want to classify themselves as nanotech so as to maintain their competitive advantage. In business, there is usually not a good reason to publicly disclose your strategic activities to your competitors. Some companies also don't need to if they've always been doing it.

Merrill Lynch is right about nanotech being an approach, a concept which I champion and introduced to them. What nanotechnology is really about, is a better approach to what we've been doing all along but now we can see and manipulate even smaller things. It is akin to when Anton Van Leeuwenhoek invented the microscope. This opened up a whole realm of being able to understand nature better by being able to observe cells and bacteria and blood capillaries that could not be seen before. This ability to much better see small things allowed new scientific breakthroughs in biology and medicine.

When science discovered the electron, it paved the way for new technical breakthroughs in electronics which affects just about everything. The term microtechnology or microelectronics conjures up images of integrated circuit chips which affects many industries also. Nanotechnology is the same. The term nanotechnology makes those who understand microtechnology more comfortable but the label is no less illuminating. However, it is understandable that for most people, they feel more comfortable having a label whether or not it really means something.

Ideally, there can not really be a nanotechnology index or nanotechnology mutual funds because nanotechnology affects many industries and markets. Similar reasoning as to why there should not be an e-Commerce or Dot.com Index. If they really want a nanotechnology index, its impact would ultimately be reflected by the overall manufacturing indices. That being the case, there's no need for a nanotechnology index if there's already a similar indicator, even though it's not born of the investment community. Was there a microtechnology index? There is a similar argument against nanotech mutual funds as with nanotech indices.

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This is another monthly column contributed by Dr. Chin to Nanotechnology Now. The full article appears in our July 2004 Premium Newsletter, along with other outstanding pieces by leaders in the field.

Read all her articles.

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