ETF Opportunities Abound in an Increasingly Monolithic Healthcare Industry

With progress being made on the coronavirus vaccine front, the Principal Healthcare Innovators Index ETF (BTEC) is an example of a healthcare exchange traded fund getting into its groove. Fortunately, there’s still growth and value to be accessed in the healthcare sector according.

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.

BTEC YTD Performance

Goldman Sachs’ David Kostin recently said that the healthcare sector “is the best opportunity from a value perspective.”

Factor Delight in Healthcare

“Earlier this week, Kostin’s team upgraded the sector from underweight to overweight. Goldman had previously anticipated drug price regulations and tax increases to be major headwinds to the sector under a unified Democratic government. Now the election results make it less likely that those major policies will be implemented,” according to Business Insider.

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 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.

Recent vaccine news is vital because many of the companies involved in the COVID-19 vaccine competition, including some BTEC member firms, are in advanced stages of clinical trials.

Even with all that opportunity, the healthcare sector isn’t close to being richly valued.

“The healthcare sector now trades at its largest discount to the S&P 500 in at least 40 years, rivaled only by the roll-out of the Affordable Care Act a decade ago and the proposal of the Clinton health care plan in the early 1990s,” notes Goldman Sachs.

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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.