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BLOG: Investing in our health

Paloma Kubiak
Written By:
Paloma Kubiak

Covid-19 has dominated our lives for two years now. And treating patients and developing vaccines to defeat the virus has understandably been the focus of attention.

But now (dare I say it?) the pandemic seems to be entering its final phase, other health matters that have taken a back seat for many months, are starting to get prioritised. For example. if you have been putting off getting prescription glasses, this may be a great time to schedule an eye exam.

Delays to healthcare procedures

According to the Organisation for Economic Co-operation and Development (OECD) breast cancer screening fell by an average of five percentage points in 2020 compared to 2019, across OECD countries with available data. “The median number of days on a waiting list increased on average by 58 days for hip replacement, and 88 days for knee replacement in 2020,” the report added.

But things are looking up – at least anecdotally. Among my family and friends, we’ve had a knee replaced, moles have been investigated and face-to-face doctor appointments at a health care center have taken place.

And the impact of coronavirus on the broader healthcare sector hasn’t been all bad, according to the 2022 Global Health Care Outlook from Deloitte. It found Covid-19 had accelerated numerous existing and/or emerging healthcare trends, such as rapidly evolving digital health technologies, care delivery models, and clinical innovation.

“As sector stakeholders and the consumers they serve face an unfamiliar world of remote working, virtual doctor visits, and a supply chain marked by shortages of medical supplies, personnel, and services, the sector is transforming to meet the new challenges,” it stated. However, medical procedures like hemodialysis must never be delayed even in the midst of a pandemic. In addition, those who are concerned about their prostate may look here to schedule an appointment.

Healthcare is a hugely important sector, which includes everything from the pharmaceutical giants to innovative biotechnology firms. It is extremely diverse and therefore also full of exciting investment opportunities.

Healthcare opportunities

Billions of pounds are already being spent diagnosing conditions, developing treatments for diseases, and giving people a better quality of life. And studies predict the levels of investment required will soar over the coming years.

We also have an ageing world population – a population that’s likely to be in greater need of medical intervention in future. Data compiled by the World Health Organization predicts the number of people aged 60+ will rise from 900 million to two billion between 2015 and 2050. That increase would take the percentage in that age bracket from 12% to 22% of the global population.

Here, we highlight some investment funds embracing these themes that could be worth considering.

Funds with healthcare exposure

Many investment funds recognise the importance of having exposure to the broader healthcare sector. Some are focused solely on the sector, while others have selected holdings.

For example, Morgan Stanley Global Brands has Abbott Laboratories, a US medical devices and healthcare company, among its 10 largest holdings. It also invests in Danaher, another US company that designs and produces a variety of medical products, tools and software.

Then there is the Lazard Global Equity Franchise fund. Healthcare is the largest sector in the portfolio, accounting for 28.6% of assets under management. The companies it buys into include US-based CVS Health, whose interests include retail stores and pharmacies, and Fresenius Medical, the German provider of products for those with renal diseases.

Other funds embrace larger pharmaceutical companies. For example, one of the largest holdings in the Schroder Income fund is GlaxoSmithKline. The company made an adjusted operating profit of £9bn in 2020, at which point it had 40 new medicines and 17 new vaccines in development.

Other funds invest in very specific healthcare areas. AXA Framlington Biotech fund is one such example. Despite having a fantastic 2020 during the search for a Covid vaccine, the sector has underperformed since the vaccines were found to work and sentiment has soured further as a result of inflation/rising rates hitting growth stocks. However, the fundamentals remain strong, and valuations are looking good.

Polar Capital Global Healthcare Trust, meanwhile, is a more generalist offering, investing in companies all around the world that predominantly come from four sub-sectors: pharmaceuticals, biotechnology, medical technology and healthcare services.

Juliet Schooling Latter is research director at FundCalibre