Six ways to invest in an inflationary environment
UK inflation rose to 9% in April, its highest level in 40 years and almost double the rate the Bank...
It’s time to break out your pink ribbons: October is Breast Cancer Awareness month. Breast cancer is both the second most common cancer, and the second-leading cause of cancer death, in women. It’s become synonymous with the month of October, but the changes and innovations in the healthcare industry are continual. I wanted to explore how investors can not only invest in those companies seeking improvement in healthcare, but also benefit from innovation in this sector.
“There’s nothing more important than our good health – that’s our principal capital asset.” — Arlen Specter, formed US Senator
Many people associate healthcare with pharmaceutical companies, but it is home to numerous offerings including biotech, medical services, managed care and even technology. It’s also exciting: several Elite Rated investment trusts invest in businesses which are attempting to solve some of the biggest health challenges of our time, for example, by providing transformative treatments and technologies.
Currently, 17% of Scottish Mortgage Investment Trust is invested in medical-related firms, compared to 12% five years ago and 3% ten years ago*. According to co-manager Tom Slater, “the trust’s enthusiasm for the sector stems from a convergence of technological breakthroughs that have accelerated innovation…including in the tackling of the most feared afflictions: cancer, heart disease and Alzheimer’s.”
The main drivers of healthcare remain unchanged: there is accelerating demand, as people are increasingly living longer. Therefore, according to Tom, cost reduction is critical. New technologies can help reduce costs and improve outcomes for patients. Alex Illingworth, co-manager of Mid Wynd International trust agrees that global demographics have created a focus on lower healthcare costs. The trust currently has just over 20% in healthcare and Alex, along with co-manager Simon Edelsten, told us more about how they approach healthcare on the Investing on the go podcast.
Specialist trust Polar Capital Healthcare Trust focuses on companies in the pharmaceuticals, biotechnology, medical technology and healthcare services areas. LivaNova, is one example of a medical device company the managers believe has a “significant potential opportunity ahead with its device to treat depression, something that could dramatically boost the growth profile of the company if successful.”**
And let’s not forget about the elephant in the room: Covid.
The pandemic has accelerated the adoption of telehealth and digital services around the world. Elsewhere, the rapid production of the vaccine and a growing realisation that continued vaccination will be the way forward, means there’s still potential for growth for those both involved in the supply chain but also, yes, pharmaceutical companies. UK focused Schroder Income Growth trust has almost 11%*** invested in healthcare through the trust’s largest two holdings AstraZeneca and GlaxoSmithKline.
*Source: Baillie Gifford, Disrupting disease
**Source: Polar Capital Healthcare Trust, August 2021 update
***Source: fund factsheet, 31 August 2021