While capital markets are seemingly fixated on the astounding returns of big tech and the growth prospects of artificial intelligence (AI), the sector isn’t the only bull in town. The healthcare sector is also outperforming and shouldn’t be overlooked by long- and short-term investors.
While big tech remained in pole position, the 2023 year-end rally certainly benefited a number of sectors and assets. The start to 2024 saw certain assets stumble out of the gate. But the healthcare sector remained resilient.
“The everything rally’ that started in October has slowed in the new year for assets including small-caps, industrial stocks and gold. One exception: health care stocks,” noted a Wall Street Journal report.
Major indexes have regained their footing and are trending higher once again. But healthcare is outpacing the overall broad market. Even in downturns, healthcare is often viewed as a safe haven sector. That allows investors to stay in the market as opposed to remaining on the sidelines or seeking safety in other assets like gold.
“The health care sector has added 7.8% this year, outpacing the S&P 500’s 6.5% gain,” the report added. It noted that it makes healthcare the “third-best performing segment in the broad-based index after the tech-heavy communication services and information technology segments, which are up about 10% each.”
From a technical standpoint, the long-term trend is also favoring healthcare, as seen in its 200-day moving average.
“The health care sector is the only one of the S&P 500’s 11 segments to have more stocks above their 200-day moving average now than at the start of 2024,” the WSJ report noted, according to a Strategas research note by Chris Verrone.
Triple Leveraging Healthcare
If healthcare’s upward trend holds, traders may want to consider using the Direxion Daily Healthcare Bull 3X ETF (CURE). The fund seeks daily investment results equal to 300% of the daily performance of the Health Care Select Sector Index. The index includes domestic companies from the healthcare sector, such as pharmaceuticals, healthcare equipment and supplies, healthcare providers and services, biotechnology, life sciences tools and services, and more.
CURE is up 17% year to date. Its top holding, UnitedHealth Group, is fundamentally sound and given an aging population, its long-term prospects look appealing.
“Following the end of World War II, the U.S. experienced a massive population growth – the baby boom,” Investorplace noted. “However, humans get older and when they do, they increasingly require care,” and that “aging is an inevitability and that affords UNH (UnitedHealth Group) a level of permanent relevance.”
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