The iShares U.S. Medical Devices ETF (NYSEArca: IHI), the largest dedicated medical devices exchange traded fund, was a leader earlier this year as the health care sector surged, but IHI was not immune to the tumble experienced by the health care sector during the summer.
Market analysts argue that medical devices and equipment manufacturers are a good healthcare bet and remain well positioned for global growth, reports Constance Gustke for CNBC.
Specifically, observers argue that medical technology companies can tap into increased healthcare spending among emerging economies while the U.S. market has matured and could experience slower growth.
Emerging countries have a large, aging demographic and workers are seeing incomes rise, which could equate to a 15% revenue growth for medical technology companies from those countries, Gregory Chodaczek, a senior research analyst at Sterne Agee, said.
For instance, McKinsey & Company calculated that China’s healthcare spending could triple between 2011 and 2020. [Growth for Medical Devices ETFs]
With the health care sector recently firming and IHI up nearly 6% over the past month, investors might want to give the medical devices a look as potential play heading into the end of the year.
“The rally from that point was steep although over the past few weeks prices stalled. But on-balance, or cumulative volume, which is a proxy for supply and demand for a stock or index, continued to move up to new highs for the year. This suggests money is still flowing into the component stocks of the index, and that increases the odds for an eventual upside breakout from the range,” reports Michael Kahn of Barron’s on the Dow Jones US Select Medical Equipment Index, IHI’s underlying index.
Looking ahead, in the years through 2024, spending growth is projected to average 5.8% and peak at 6.3% in 2020.
Additionally, the actuaries calculated that around 8.4 million Americans became insured in 2014 and noted their increased use of medical services. The number of people on Medicaid is projected to increase to 78.1 million by 2024, outstripping Medicare, which is expected to have 70.3 million enrolled. [Healthcare ETFs: Specialized Drugs in Greater Demand]
iShares U.S. Medical Devices ETF
