3 Key Growth Drivers for Canada’s Largest Healthcare ETF


May 30, 2024
By Ambrose O’Callaghan

The healthcare sector has provided a lot for investors to chew on in the first half of 2024. Now, as we look ahead to the latter half of the year, it is worth reviewing some of the top growth drivers for this sector going forward. Today, I want to examine the key growth drivers for healthcare in 2024 and determine how Canada’s largest healthcare ETF is well-positioned to take advantage of these trends.

Aging populations in North America and worldwide

Aging populations in North America and across the developed world are a hugely significant growth driver for the healthcare space.

According to a July 2018 report from The Conference Board of Canada, the proportion of seniors in the Canadian population will rise from 16.9% to 21.0% over the next 10 years. The growth of seniors over that decade will contribute to a $93 billion increase to health care costs over the same stretch. That is equivalent to 1.8% of all provincial and territorial government spending over the next 10 years.

This trend is not restricted to Canada. Between 2015 and 2050, the World Health Organization (WHO) projects that the proportion of the world’s population over 60 years will nearly double from 12% to 22%.

Back in August 2023, Harvest ETFs CIO and lead portfolio manager Paul MacDonald talked about how aging populations were affecting the healthcare sector. This piece referenced a Centers for Medicare & Medicaid Services National Health Statistics Group study that showed the per-capita total personal healthcare expenditures of a US individual aged 19-44 is $4,856. Meanwhile, for an individual aged 45-64 that increases to $10,212 and for those 65 and older it reaches $19,098.

The evolution of GLP-1 Drugs

Glucagon-like Peptide-1 receptor agonists (GLP-1s) are a class of medications that are used to treat type 2 diabetes mellitus (T2DM) and obesity. This class of medications are among several pharmacological options for these endocrine diseases. GLP-1 agonists lower serum glucose levels. This allows it to manage metabolism in affected patients.

Back in April 2024, Goldman Sachs released a report projecting that the global GLP-1 market will grow to US$100 billion by 2030. The report added that the market could grow much higher if more insurers cover GLP-1s and the drug class continues to show promise in treating other diseases.

In late May 2024, the popular GLP-1 Ozempic was shown to slow the worsening of kidney dysfunction in patients with type 2 diabetes. Moreover, the late-stage trial showed that Ozempic also lowered the risk of kidney failure, heart problems, stroke, and death. The detailed data on the trial of 3,533 patients with type 2 diabetes and chronic kidney disease was presented at the European Renal Association meeting in Stockholm.

Rise of Robotics in the Healthcare space

The global Medical Robotics market was estimated to be worth US$13.19 billion in 2023, according to a report in Standard Bots. That same report projected that the market would deliver a compound annual growth rate (CAGR) of 15.69% from 2023 through to 2032, when the market is expected to be worth US$52.41 billion. Over that time, hospitals will continue to hold the largest market share.

By 2032, Hospital and Pharmacy robots are going to be the most invested in Medical robots, followed by Surgical robots and Rehabilitation robots. Healthcare providers will ideally feel the benefit of robot assistance as they help to alleviate workloads for human personnel.

How HHL and HHLE provide healthcare access and high income every month

The Harvest Healthcare Leaders Income ETF (HHL:TSX) seeks to provide investors access to US healthcare companies that combine innovation with consistent demand in the healthcare space. HHL offers steady income and growth opportunities from large-cap US healthcare leaders.

Units of HHL have climbed 3.6% in the year-to-date period as at April 30, 2024, 7.48% on a 1-year period, 9.07% over a 3-year period, and 10.9% over a 5-year period. Meanwhile, this ETF has paid out a monthly cash distribution of $0.0583 per unit since its inception. That works out to a total cash distribution of $6.5296 per share since its debut.

Harvest Healthcare Leaders Enhanced Income ETF (HHLE:TSX) is designed to deliver enhanced income and growth opportunities by applying modest leverage to an investment in HHL. It offers access to the same portfolio of large-cap US healthcare companies with enhanced monthly cashflow.

HHLE has delivered an annualized gain of 18.25% over the past six months as at April 30, 2024, 4.12% in the YTD period, 7.76% in the 1-year period, and 12.25% since inception. Moreover, HHLE has paid out a monthly cash distribution of $0.0913 per unit since it debuted in late 2022. That represents a current yield of 10.36% based on the closing price as of May 27, 2024.


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