The coronavirus pandemic is proving that the healthcare sector needs to innovate and do so rapidly, a theme that could benefit ETFs, such as the Principal Healthcare Innovators Index ETF (Nasdaq: BTEC).
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.
“Forced to adopt innovative methods to monitor patients from a safe distance, the coronavirus outbreak has caused a paradigm shift in the mindset of healthcare systems worldwide,” reports the Jerusalem Post. “If digital healthcare innovation and telemedicine was only starting to penetrate hospitals and medical practices prior to the outbreak, COVID-19 has proved that its implementation is needed immediately.”
Proving its exposure to the sector’s innovative companies, BTEC is overweight healthcare equipment and supplies, biotechnology, life sciences tools, healthcare technology, and technology hardware companies, so the fund is less focused on areas like pharmaceuticals, equipment, supplies, providers, and services.
Bank on BTEC
Massive disruption is taking the healthcare space by storm. Rapidly evolving technologies are quietly and completely morphing the medical field as we know it. Robotics, artificial intelligence and healthcare innovations are becoming significant change agents across the industry.
Importantly, BTEC stands to benefit in a post-coronavirus healthcare space.
“Federal and state regulatory relaxations coupled with increasing social distancing guidelines due to the COVID-19 pandemic have accelerated telehealth adoption and paved a new way for healthcare innovation, according to Christopher Scanzera, vice president and CIO at AtlantiCare,” according to Becker’s Hospital Review.
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.
Adding to the allure of BTEC for long-term investors is that the fund focuses on research and development-intensive companies. These are the types of companies that can find major breakthroughs, be it equipment, treatments or vaccines.
Conversely, BTEC excludes companies with histories of bleeding cash or negative earnings growth, potentially reducing volatility while providing an added layer of security.
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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.