Healthcare stocks benefit from long-term thematic trends, with demand driven by aging populations in developed markets and economic growth in emerging markets. Scientific progress is opening doors to new treatments while reducing costs. And demand for healthcare tends to transcend cyclical turns in the economy.
The technological revolution in healthcare is just beginning. Robotic surgery, new diagnostics and life science tools that can identify diseases at an earlier stage, and treatments for Alzheimer’s disease and cardiovascular disorders, are among many new developments driving growth in the sector. Telehealth and digitization offer dramatic potential to deliver better patient care.
Still, some investors might not feel comfortable investing in a single-sector portfolio. Healthcare, however, deserves a special place in an equity allocation. We believe a carefully curated portfolio of healthcare stocks offers a unique combination of strong return potential and risk reduction characteristics for changing market conditions.
Healthcare has long been considered one of the most reliable defensive sectors. Despite short-term bouts of turbulence, as seen during 2022, we believe the dynamic products and services that now dominate the healthcare space are the reason why a portfolio of carefully selected stocks in the sector still enjoys long-term defensive characteristics.