Investors who haven’t been paying attention may not be up to date on some important points about the healthcare sector. This isn’t your grandfather’s healthcare sector, and the group is home to an increasingly innovative spirit.
While those may sound like superficial points, there are important investment implications, many of which are relevant to select exchange traded funds. That group includes the Goldman Sachs Future Health Care Equity ETF (GDOC).
GDOC is an actively managed ETF, and for investors looking to be on the right side of healthcare innovation, that’s a relevant trait because many of the passive funds in this category aren’t adequately exposed to the growthier corners of the healthcare sector. As an active fund, GDOC can provide and boost exposure to life sciences, many of which are driving the next generation of healthcare innovation.
“Life Sciences is currently the largest sector within the healthcare industry and has continued to expand rapidly, with heightened demand for therapeutics driven by aging demographics and the rising prevalence of chronic disease,” noted Goldman Sachs Asset Management (GSAM).
Life sciences, which includes biotechnology and pharmaceuticals, is the largest part of the healthcare sector, and the long-term outlook for those industries is compelling.
“The COVID-19 pandemic highlighted the importance and impact of the innovation and structural changes that are driving LS growth globally. We believe the current landscape provides opportunities to drive research forward in critical LS areas and explore new avenues for streamlining drug development and approval processes,” added GSAM.
Investors have often considered large-cap biotech and pharmaceuticals to be mature, steady, but slower growth outfits. Owing to active management, GDOC is home to some blue-chip pharma companies, which serves as a volatility-reducing quality-enhancing trait.
Still, the Goldman Sachs ETF has ample leverage to mid-sized, nimble companies that could be among the next generation of great life sciences growth stories. Another point in the ETF’s favor is its intersection with other disruptive technologies, which bolsters its long-term investment thesis.
“Advancements in the understanding of disease and a convergence of innovation across many scientific disciplines are enabling the development of new drug platforms that create novel ways to treat disease and solve patients’ unmet needs. Separately, regulatory bodies are creating policies to better leverage new technology and create new approval pathways, with a concerted effort in many geographies to support domestic LS innovation and development,” concluded GSAM.
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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.