Healthcare innovation is a concept that was thrust into the investment spotlight due in large part to the coronavirus pandemic, but that doesn’t mean the related investment thesis disappears if the world eventually recovers from it.
In fact, the long-term outlook for healthcare innovation investments, broadly speaking, is compelling, and that’s true regardless of the fate of the coronavirus. That highlights opportunity with exchange traded funds, including the Goldman Sachs Future Health Care Equity ETF (GDOC).
GDOC debuted last November and focuses on disruption in the healthcare sector. While investors readily associated the technology sector with disruption, the potency of that theme shouldn’t be overlooked as it pertains to healthcare because this is one of the most innovative sectors on the market — perhaps second to only tech. Much of that innovation revolves around digitization.
Healthcare innovation is a hotbed of investment as venture capitalists pour into the space and startups raise record sums.
“Health investing in New York City hit a historic high in 2021 as 182 health and life sciences startups raised a total of $9 billion, according to the 2022 New York Healthcare Innovation Report released Tuesday by the New York City Health Business Leaders,” reports MedCityNews.
Digitization — a theme GDOC taps into — is one of the premier disruptive healthcare themes and has one of the most attractive long-term outlooks.
“Digitalisation is a strategic priority for public healthcare policy: major innovations in medicine are expected from the development of IT tools and the generalisation of digital models, which will contribute to improving the efficiency of healthcare systems and services,” according to Inria.
As an actively managed fund, GDOC is ideally positioned to capitalize on emerging trends in healthcare, perhaps more rapidly than index-based rivals. The fund holds 59 stocks with the top 10 holdings combining for 38.3% of the fund’s weight, indicating a high-conviction style.
Adding to the long-term allure of GDOC is the fact that healthcare innovation can be a key part of reducing costs in the healthcare system — a task which the U.S. must get to work on immediately.
“The 2021 World Index on Healthcare Innovation, conducted by the Foundation for Research on Equal Opportunity (FREOPP), ranked the United States in 6th place among the world’s healthcare systems. The analysis finds that the United States is a global leader in scientific advancement but that our healthcare system is fiscally unsustainable,” according to the Peter G. Peterson Foundation.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.