How to profit from healthcare trends

July 31, 2018

Published by Harvest Portfolios




This generation of retirees is living longer and playing harder as they work to stay as active in retirement as they were in mid-life.

Whether it is golf, cycling, jogging or tennis, rising longevity along with healthier living mean that today’s 70 year olds may be in as good shape as their parents were at 50.

But try as they might, Baby Boomers can’t completely defeat the onset of ageing. Their limbs are getting a little stiffer, joints a little sorer and for many hip and knee replacements are a way to alleviate pain and return mobility. The procedures have evolved with lighter, stronger materials and less intrusive surgery with a faster healing process.

The Canadian Institute for Health Information (CIHI), a non-profit group based in Ottawa, says hip and knee replacements are growing by double digits, improving the quality of life for almost 123,000 Canadians each year at a cost of $1 billion to the system.  CIHI’s latest report notes that two-thirds of hip replacements are going to patients 65 or older. Knee replacements have a younger demographic with half of all patients 50 or older. Demand continues to grow, CIHI says.

For investors this is one trend among broader healthcare opportunities. Canada has very few home grown heavyweights in this sector. The S&P/TSX Capped Health Care Index has eight stocks, three of which are cannabis companies and a fourth Valeant Pharmaceuticals has been in the news for all the wrong reasons.

The Harvest Healthcare Leaders Income ETF (HHL-T) is one Canadian-based ETF that aims to capture growth in this sector. The Fund invests in the stocks of 20 healthcare issuers from the Healthcare Leaders Investable Universe that have a minimum market capitalization of US$5 billion at the time of investment. They must also have options listed on a recognized options exchange.

Two of the top holdings in the ETF are Stryker Corp., with a market cap of US$63.98 billion and Boston Scientific Corp with a market cap of $43.14 billion (as at July 30, 2018). Both offer a broad range of medical devices and equipment and are benefiting from the medical needs of an ageing population.

Canada is part of a global trend which is seeing an ageing demographic and higher healthcare spending.

To discover more about HHL, click here.

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