Traditionally defensive health care stocks and sector exchange traded funds also tap into a new group of growth investment plays.
Some of the best-known technology venture capitalists and prominent money managers are investing in companies that gather and analyze healthcare data, capitalizing on the potential growth in electronic record keeping and wider acceptance of personal health devices, Reuters reports.
So far this year, venture capital funding for healthcare tech-related firms is at $2.3 billion, up 176% for the same period year-over-year, with most of the investments going into payment management and data analytics.
In contrast, funding for biotechs increased 28% for the year ended June 30, compared to the same period year-over-year.
Skip Aylesworth, manager of the Hennessy Technology fund, has allocated a quarter of his portfolio to health tech-related companies due to the growth in U.S. healthcare spending. For instance, Aylesworth has targeted drug distributor McKesson Corp (NYSE: MCK) due to its IT services for hospitals. The broad healthcare ETF, Guggenheim S&P Equal Weight Healthcare ETF (NYSEArca: RYH), includes a 1.9% weight toward the company. [Equal-Weight Works With Health Care ETFs]
Zachary Shafran, the lead portfolio manager of the Waddell and Reed Science and Technology A Fund and the Ivy Science and Technology fund, has taken bets on health insurer UnitedHealth Group (NYSE: UNH) and device maker Boston Scientific Corp (NYSE: BSX).
RYH also include a 1.9% tilt toward UnitedHealth and a 1.7% position in Boston Scientific. Alternatively, investors can also focus on medical equipment and supplier through the iShares U.S. Medical Devices ETF (NYSEArca: IHI), which includes a 3.5% position in Boston Scientific.