The Principal Healthcare Innovators Index ETF (Nasdaq: BTEC) is among the cadre of healthcare ETFs that are soaring this year owing to the COVID-19 pandemic, but with Election Day drawing closer, investors should remember this sector is sensitive to political outcomes.
There are never any guarantees when it comes to healthcare and politics, but BTEC’s innovative growth purview can mitigate some of the sector’s political vulnerabilities.
BTEC tracks the Nasdaq U.S. Healthcare Innovators Index, which is designed to provide exposure to early-stage small-capitalization healthcare companies. These are primarily biotechnology and life science, which have the potential to create cures for cancer, develop new medical technologies, or spearhead other medical advances.
“It isn’t just about the presidential race. If Democrats succeed in taking both the Senate and the White House, they could revive ambitious efforts to remake the health-care system that would negatively affect the prices of health-care stocks. Divided government, on the other hand, would rule out big legislation, and could set up health stocks to climb,” reports Josh Nathan-Kazis for Barron’s.
Tech Matters
Since the coronavirus outbreak, health care technology has come to the fore with various innovations to combat the virus. This can only help fuel health care technology exchange-traded funds (ETFs) moving forward from preventative medicine to treatment. That trend benefits BTEC and can keep it away from debates such as insurance and pharmaceuticals pricing.
Some analysts are speculating about what desired outcomes could be for the healthcare sector and investors on Election Day.
“Raymond James analyst Chris Meekins says that the health-care sector would outperform the market if Biden wins the presidency and the Republicans keep the Senate. In a July 30 note, he wrote that the health-care sector historically has outperformed the market under divided governments, and underperformed when one party controls both branches,” according to Barron’s.
With its positioning at the cusp of healthcare innovation, a theme being spotlighted by the COVID-19 pandemic, BTEC is proving youthful healthcare investments can be served. BTEC, which turns four years old in August, “seeks to tap into the increasing demand for healthcare solutions as demographic trends have driven healthcare spending to more than double in the last 20 years,” according to Principal.
“Biden has also proposed what he calls a Pandemic Testing Board to administer a nationwide Covid-19 testing campaign. And the Biden-Sanders task force recommends, among other things, that the federal government pay for the health-insurance continuation program known as Cobra for people who lose their jobs during the pandemic,” reports Barron’s.
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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.