Amid the coronavirus pandemic, some healthcare ETFs are coming off age and showing they have the right mix of innovation and growth to reward investors. That group includes the Principal Healthcare Innovators Index ETF (BTEC).
BTEC seeks to provide investment results that closely correspond, before expenses, to the performance of the Nasdaq Healthcare Innovators Index.
Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies that compose the index at the time of purchase. The index uses a quantitative model designed to identify equity securities in the Nasdaq US Benchmark Index (including growth and value stock) that are small and medium capitalization U.S. healthcare companies.
“The Principal Healthcare Innovators Index ETF recently turned four years old. It was toiling in relative anonymity until the coronavirus came around. Now, BTEC ranks as one of this year’s best-performing healthcare ETFs, confirming it’s meaningful to count Moderna and Teladoc Health (NYSE: TDOC) among its top holdings,” reports InvestorPlace.
Post-Virus Potential
What makes BTEC appealing is that the Principal fund is poised to thrive even after COVID-19 is put to bed. For example, telemedicine, one of BTEC’s industry exposures, is benefiting from the pandemic, but it’s slated to deliver exponential growth in the years ahead.
The strain the epidemic put on all aspects of the global health care system highlights broader opportunities to modernize health care by more effectively leveraging technology and digitization.
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.
Disruptive technology is not relegated to certain sectors as it will permeate into all industries in some form or fashion. For example, augmented reality is technology comprised of digital images superimposed over the real world, and its use is primed to drive industry growth–industries like real estate and manufacturing are already putting the technology to use in a variety of ways.
“Translation: BTEC is a growth play. Its index methodology allots for earnings inconsistencies while emphasizing research and development-intensive companies,” according to InvestorPlace. “Even with that, BTEC isn’t richly valued, trading at just 17.32x earnings. That’s growth at a reasonable price.”
For more on multi-factor strategies, visit our Multi-Factor Channel.
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.