The COVID-19 pandemic is altering how medicine is practiced. That’s to the benefit of healthcare workers, patients, and, perhaps, 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.
“The coronavirus epidemic is catapulting telemedicine from the outskirts of health care to its core,” reports Daren Fonda for Barron’s. “With the crisis giving millions of Americans their first taste of virtual medicine, this may be the catalyst that pushes online care to the mainstream.”
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.
BTEC Buffs Up
BTEC’s innovative posture offers growth, but it’s suitable for the long-term because the themes the fund aims to capitalize on will take some time to develop.
“A telemedicine revolution won’t happen overnight. Emergency measures that have relaxed federal regulations allowing more virtual visits would need to be made permanent. (Legislation is in the works.) States have varying requirements for telemedicine, including rules that doctors be licensed in the state and see a patient in person before an online visit. Many states waived some telemedicine rules during the crisis, but they would need to be harmonized and loosened permanently,” according to Barron’s.
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.
Data confirm the compelling growth trajectory offered by BTEC and some of its components.
“Indeed, an estimated 12 million virtual visits were conducted last year, amounting to just 2% of the 600 million “addressable visits,” according to PlushCare, a concierge online doctor service. Telehealth totaled just 0.2% of all medical claims filed in 2019, reports the independent nonprofit group FAIR Health,” 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.