Investing in growth and resilience through healthcare
In the second part of the Thematic Investing video series from our Portfolio Construction and Strategy Team, Sabrina Denis, Senior Portfolio Strategist, discusses the Healthcare sector, which is one of four areas that the PCS Team has identified as having sizeable growth opportunities going forward.
3 minute watch
Key takeaways:
- The healthcare sector has proven itself during market drawdowns thanks to steady consumer demand which allows it to act as an effective portfolio buffer during volatile times.
- Meanwhile, changing demographics, ground-breaking innovation and advances in digitalisation present significant investment opportunities in the healthcare space going forward.
- Based on portfolio insights from Janus Henderson Edge, our proprietary analytics tool, we believe that an allocation to healthcare within a global equity portfolio may offer investors superior risk-adjusted returns over the long term.
Healthcare is one of four areas that we at Janus Henderson have identified as an investment space with sizeable growth opportunities in the future.
We see particularly opportunities through digitisation, ground-breaking innovation, and favourable demographics.
We are still in the early stages, but technology is transforming every aspect of healthcare, from drug research to surgical practices.
Drugs targeting specific biological characteristics have an enormous potential to change patient outcomes for the better and reduce costs which creates new sources of growth.
Healthcare spending as a percentage of GDP is rising as populations age, particularly in large, developed economies, shifting the focus on efficient and cost-effective healthcare solutions.
Healthcare has been an effective portfolio buffer during volatile times due to steady consumer demand irrespective of market conditions. At the same time, sub-sectors such as biotechnology offer greater growth potential by driving change in areas of significant structural tailwinds.
Investors who have added healthcare to their global equity portfolio would have experienced superior risk-adjusted returns, which we can see using Janus Henderson EDGE, our proprietary analytics tool, comparing the risk and return of two portfolios over time.
Allocating to health care has notably reduced the risk versus a global equity portfolio over 5, 10 and even more than 20 years. Why’s that?
Healthcare has proven itself defensive during market drawdowns. A global equity portfolio in orange, based on regional market capitalisations, shows far higher drawdowns vs. an equity portfolio with a specific allocation to healthcare. Especially versus growth-oriented sectors such as technology, health care’s defensive characteristics are appealing and typically healthcare is also less correlated to the overall market.
All of those characteristics we can uncover by using Janus Henderson Edge, to create tailor-made portfolio analytics for all of our clients’ individual needs and challenges.
The Janus Henderson Portfolio Construction & Strategy team are of course on hand to assist you, please contact us to arrange a portfolio consultation and to hear more about the trends we see in the future.
Source: Janus Henderson EDGE report, at December 2023.
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These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.
Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
The information in this article does not qualify as an investment recommendation.
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3 minute watch
Key takeaways:
- The healthcare sector has proven itself during market drawdowns thanks to steady consumer demand which allows it to act as an effective portfolio buffer during volatile times.
- Meanwhile, changing demographics, ground-breaking innovation and advances in digitalisation present significant investment opportunities in the healthcare space going forward.
- Based on portfolio insights from Janus Henderson Edge, our proprietary analytics tool, we believe that an allocation to healthcare within a global equity portfolio may offer investors superior risk-adjusted returns over the long term.