Investing In Frontline Health Workers Is A Best Buy For Global Health And Helps Advance Us And Global Interests
Even in this time of significant economic challenges and need here at home, polls show that the majority of Americans continue to support U.S. investment in programs that save and improve the lives of impoverished children and their families in the developing world. In addition to the American generosity of spirit, there is strong evidence that frontline health workers are a best buy for global health, and taxpayer investment will reap big returns.
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% Home Price Growth: Invest In Reits Rather Than Purchase Real Estate
Written by Christopher Liew, CFA at The Motley Fool Canada
Real estate investors beware when the Bank of Canada starts the rate-hike cycle, probably in March 2022. A report from RBC Economics forecasts a drastic slow down in price growth in the housing market. Home price growth could drop to 6.2% from the 17.8% gain last year.
Homebuyers or end-users should also take note that even if higher interest rates moderate demand, affordability will remain a concern. Robert Hogue, a senior economist at RBC, anticipates supply to increase and the market to cool down in the second half of this year.
Six Ways To Invest In Healthcare
With the sector expanding at a faster rate than the broader economy, above-market returns are on offer for savvy investors.
While investing in the health sector has always been an important focus for professional investors, COVID-19 has drawn a new cohort of private investors to opportunities in this area.
The diversity in health is staggering ranging from the most speculative small-cap growth plays researching new drugs to some of the most defensive, large-scale value companies offering stable dividend streams through the sale of pharmaceuticals or hospital services.
Surprisingly, healthcare stocks have underperformed global markets over the year to October 2021 after enjoying above-market returns for many years. The sector lagged as investors positioned for an economic reopening by rotating into more economically sensitive industries and selling down small and mid-cap biotech companies after strong gains in 2020.
Generally, developed market health systems are being challenged by ageing populations and more demands on health services, increasing rates of chronic disease, costs of medical research and innovations, and making the best use of emerging health technologies and health data.
Even before the COVID-19 fiscal response in Australia, health spending was about 10 per cent of gross domestic product, meaning that $1 in every $10 spent went to health spending.
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Should You Invest In Pharmaceutical Companies
Since many pharmaceutical companies pay attractive dividends, these types of stocks are well-suited for income-focused investors. Another great reason to consider buying pharmaceutical stocks is that the U.S. population is aging. With the boomer generation becoming elderly, many more people in coming years are likely to need prescription medications.
Healthcare Investing Trends Report
Kerry Amato, Executive Director, Health Innovation, HIMSS
Healthcare investment spend by venture capitalists is often seen as an indicator of where current and future technology needs may be present within healthcare. These needs can be driven by factors including patient needs/expectations, societal changes, technological advances and others. As we begin to emerge from COVID-19 as an industry, it is no surprise that we are seeing more investment in areas like behavioral health, remote patient monitoring , telehealth, cybersecurity, virtual fitness and others.
According to Rock Healths Market Insights Report, venture capital dollars flowed to U.S. digital health companies at a new all-time high, with over $14 billion invested across 440 deals. This influx in capital as well as the rising voice of the consumer has left our current healthcare ecosystem ripe for innovation and new ideas.
Source: Rock Health
With this, several investors shared their insights on what trends they are seeing in the marketplace and a look ahead on what to expect in healthcare investing.
Pothik Chatterjee, Executive Director, Innovation & Research, LifeBridge Health Emily Durfee, Manager, 1501 Health Innovation and Jordan Evans, Manager, 1501 Health Innovation HIMSS Collaborators
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Investing In The Healthcare Sector
The healthcare sector is made up of many different industriesfrom pharmaceuticals and devices to health insurers and hospitalsand each has different dynamics. Investments in this sector are affected by many variables, including positive trends related to demographics and negative trends related to reimbursement. Healthcare investing requires a multifaceted approach to understand the underlying drivers. Investors can profit from investments in both the overall sector and/or its industries. This article will detail the differences among the various healthcare industries and which metrics investors should follow before making an investment.
Trends in the Healthcare Sector
When deciding on a healthcare company in which to invest, keep the following prevalent trends in mind. Changes to or continuations of these trends can have implications for a variety of areas within the healthcare sector.
Positive trends include:
- the aging population and the baby boomers
- people living longer with chronic disease
- obesity and diabetes epidemics
- the global reach of disease
- personalized medicine
- a single-payer system
- the uninsured
- cost controls
- consumerism
Who Pays the Bills?Health insurers are the companies that pay the bills – sort of. Companies purchase health insurance in one of two general ways:
Facilities
Other Industries
Option : Healthcare Etf Or Index
Many investors don’t feel comfortable picking individual stocks. That’s fair enough — and, fortunately, there are ways to invest in the whole healthcare sector at once. Index funds and exchange-traded funds are designed to track the performance of the healthcare sector , and they provide an easy way to get exposure without having to know as much about the individual companies.
When picking an index fund or ETF, you want to get a low expense ratio — preferably 0.25% or lower — because fees are a brutal killer of returns. Every dollar you’re paying out in fees is a dollar that isn’t working for you.
My favorite ETF in healthcare is the Vanguard Health Care ETF, which offers broad exposure across the entire sector for a 0.09% expense ratio. If you’re looking for something a bit more targeted toward growth, the SPDR S& P Biotech ETF has a 0.35% expense ratio — a little higher than I usually like — but focuses in on the high-growth biotech sector. While an investment there will undoubtedly be more volatile than the Vanguard Health Care ETF, investors are still well-diversified across over a hundred biotech stocks.
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Why Invest In Healthcare Stocks
Healthcare is a human necessity. This means the demand for healthcare services typically remains unchanged, regardless of how other industries rise and fall. Investing in well-established healthcare stocks can provide a cushion of security in an aggressive-growth portfolio.
Healthcare stocks also offer investors the opportunity to fund medical research. As the field continues to expand, investors can support research efforts seeking to cure disease.
Healthcare Has Both Defensive And Growth Characteristics
The healthcare sector has both defensive and growth characteristics. As such, it can play a valuable role in investor portfolios, according to an investment note from UBS.
- Healthcare is a defensive sector because of its low correlation to economic swings and other global macroeconomic uncertainties. People will still need medical care even in a recession.
- Healthcare also has exposure to structural growth trends such as ageing populations and medical innovations such as genetic therapies. The US Food and Drug Administration expects to approve 10 to 20 new cell and gene therapies every year by 2025.
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Understanding The Biotech Industry
A biotechnology company uses living organisms such as bacteria or enzymes to make drugs. This use of living organisms differentiates biotechnology companies from pharmaceutical companies, which research and develop chemicals to invent drugs.
Investors should pay close attention to which phase each of a biotech company’s drug candidates is in. Drugs in later phases are more likely to succeed, making investing in that company less risky. There are four major steps and three phases that biotech companies follow to develop new drugs:
1. Drug discovery: A biotech company first identifies a drug candidate and the diseases that it potentially can target.
2. Preclinical testing: The company tests the drug candidates in vitro and/or in vivo .
3. Clinical testing: The drug candidate is tested on humans. Clinical testing generally occurs in three phases:
- Phase 1: Small studies are conducted to find a safe dose for the drug candidate and determine how the drug affects humans.
- Phase 2: Larger studies involving around 100 or more patients are conducted with a focus on safety and short-term side effects and to determine the optimal dose for the drug.
- Phase 3: Even larger studies, with hundreds or even thousands of patients, are conducted to demonstrate how effectively and safely the experimental drug treats the target disease.
Healthcare Companies Are Well
The healthcare infrastructure subsector is also exiting the pandemic in a better position than it entered. The early stages of the pandemic were challenging for business models, such as post-acute care, hospitals, dialysis, and others. Even with these challenges, managed-care companies performed well initially, as an overall reduction in healthcare utilization resulted in falling costs and rising profits.
I believe healthcare-service companies are well-positioned to help solve one of the greatest challenges we face: rising healthcare costs.
One of the silver linings of the COVID-19 pandemic is that I feel it has accelerated a structural change in human behavior, as customers are now willing to consume healthcare in lower-cost settings and will become less reliant on hospitals.
This shift in behavior could benefit companies involved in government-backed real estate assets for supported living, home health care, ambulatory care, IT solutions, and telehealth.
This transition is part of a broader trend that will see the healthcare sector evolve from fee-for-service models to fee-for-value models. In recent years, weve seen business models emerge in which primary care physicians and other healthcare providers work together to provide care to individuals throughout their healthcare journeypotentially improving outcomes and reducing costs.
So will 2022 be the year to invest in healthcare? It seems so.
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What Are Ai Healthcare Stocks
What are AI healthcare stocks? To understand AI in healthcare, we need to first understand what AI is. While computers excel at performing calculations, not all of them can do what humans do with ease: language processing, manipulating and moving objects, reasoning and others. AI uses computers to complete tasks that usually demand human intelligence.
Therefore, an AI healthcare stock is a stock in a company that operates in the healthcare sector and offers a product or service that incorporates AI.
Types Of Healthcare Stocks
Each stock market sector comprises many industries, each with their own nuances, and healthcare is no different. Four of the most important of subtypes of stocks in the case of the healthcare sector include:
- Drug stocks. These are companies that develop and manufacture pharmaceuticals used in the treatment and prevention of diseases or infections.
- Medical devices stocks. These include companies that design and manufacture medical tests, instruments and equipment, many of which are used in medical research and development processes, including by pharmaceutical companies.
- Health insurance stocks. This healthcare industry consists of companies that offer health insurance plans to meet the cost of healthcare for employers and individual consumers. It also includes pharmacy benefits managers .
- Medical services provider stocks. This subgroup includes hospital operators, home health companies, managed care facility operators and other companies that provide healthcare services.
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Why Invest In The Healthcare Sector Post
As nationwide vaccine rollout continues across the United States, attention on the healthcare industry has not falteredneither has that of investors. While a majority of sectors in the private equity industry have observed significant downturns since the start of the pandemic last March, three notable private equity sectors have experienced promising growth: healthcare, software, and biotech/pharmaceutical companies.
But why invest in healthcare sector now that the new normal is almost behind us? The pandemic may be ending, but its societal aftereffects are not.
The Biggest Winner Of 2022 Will Be Healthcare
While COVID-19 disruptions could continue for months or even years, I believe strong fundamentals and robust innovation will fuel growth across healthcare sectors in the year ahead and that the biggest winner of 2022 will include the opportunity for capital preservation and growth will be healthcare.
A breakthrough innovation in the biopharma industryparticularly in oncology, immunology, and certain rare diseasesis generating a rich opportunity set for specialist investors. Key medical-technology companies are also facilitating significant drug development and are benefiting from the increased spending and proliferation of new drug candidates.
In addition, diagnostics companies are helping with widespread COVID-19 testing while also creating more convenient routine medical tests and, increasingly, enabling early cancer screening.
Importantly, the overall delivery of healthcare continues to evolve. The US, for example, is experiencing a decades-long transition toward a fee-for-value payment system from a fee-for-service approach. This shift encourages new business models and supports substantial growth potential for lower-cost care models.
These tailwinds across the various healthcare subsectors, coupled with strong valuation support, create a positive outlook for this sector than ever before.
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Pros Of Health Care Stocks
Investments in health care stocks come with several benefits. Some of the most important to consider when deciding whether to invest in the sector, include:
1. Theres a Wide Range of Opportunities
The health care market is massive, offering a wide range of opportunities across stocks with wide-ranging market caps that live at various different levels of risk. As a result, regardless of your goals when you make investments, youll likely find an opportunity or two that fits well in your portfolio.
For example, if youre looking for a stable growth stock that pays dividends and comes with a relatively low level of risk, you would likely dive into a blue-chip stock like Johnson & Johnson. This stock has a long history of sustained growth and increasing dividends, fitting the bill for exactly what you want.
On the other hand, if youre willing to take on more risk and want to get in on a company on the ground floor for a potential opportunity to win big in the long run, you may look at Novavax. This company has multiple vaccine candidates under development, some in late stages, and seems to be changing the way we see influenza vaccination while also working on a COVID-19 vaccine candidate.
If youre somewhere in between and dont want to take the risk on the ground level, but still want the opportunity for significant gains, you may look at a company like Gilead Sciences.
2. The Industry Is Interesting
3. Theres a Feel-Good Effect
How Healthcare Reits Make Their Money
Like most property-owning REITs, healthcare REITs buy or develop properties and lease them to tenants. These REITs rent to tenants who operate various healthcare businesses.
There are several subtypes of properties under the umbrella of healthcare real estate. Some REITs, such as National Health Investors, invest in a combination while others, like Global Medical, specialize in a specific property type. Heres a list of some of the more common types of healthcare real estate that REITs often invest in:
- Hospitals
- Wellness centers
- Senior housing/assisted living
Some healthcare REITs dont use the traditional landlord-tenant model with all of their properties. Senior housing, assisted living, and skilled nursing facilities are often operated as partnerships. The REIT and the facilitys operator each get a share of the businesss operating profits.
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Intelligent Ways To Invest In Your Health
Health is one of the most critical components of a persons well-being. As a result, it makes sense for people to invest in their health to enable them to live their lives to the fullest for that much longer, whether said investment will take the form of money, time, or effort. Fortunately, investing in ones health is much easier than most people expect, not least because there are so many options out there.
Here are 10 options for people who want to invest in their health:
Educate Yourself
First and foremost, people who want to invest in their health need to educate themselves about what they need to make themselves as healthy as possible. Fortunately, there is a lot of information that can be found out there on the Internet as well as using other resources. With that said, interested individuals should focus on resources from trusted authorities because there is a great deal of nonsense out there as well.
Sound Eating Habits
What people eat has an enormous effect on their health. For example, eating the right selection of foods is essential for ensuring that interested individuals have all of the right nutrients. Likewise, eating on a regular basis is essential for ensuring that they have the fuel needed to power themselves through their normal routines. As a result, it is critical for people to build up sound eating habits.
Regular Exercise Routines
Proper Sleeping Patterns
Preventive Care
Friends
Volunteering
Stress Management
Investing In Healthcare Stocks For Beginners
Now that the world has one foot in and one foot out of a pandemic that affected nearly every aspect of life on Earth for more than a year, the healthcare sector has been hogging the spotlight for quite some time. From life-saving vaccines to artificial intelligence, the modern healthcare sector offers something for every investor but how much do you really know about this huge and profitable segment of the economy?
To help readers prepare before they take the plunge into healthcare-sector investing, GOBankingRates developed this guide.
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