At Adviser Investments, we’ve been betting on health care for a long time, and the sector is a meaningful position inside most of our clients’ portfolios. But in recent months—even as doctors and scientists came up with a lifesaving COVID-19 vaccine in record time—health care stocksA financial instrument giving the holder a proportion of the ownership and earnings of a company. have underperformed the broader market. In our webinar Rocket or Rollercoaster: Where Will the Markets Go From Here?, Research Analyst Liz Laprade explained why we still believe the health care sector has a bright future.
Please enjoy the excerpt below and click here for the full webinar replay to hear more.
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We’ve been bullish on health care and biotech for quite some time for a few reasons—specifically, the tailwinds behind aging demographics, increased access to health care globally (in foreign or emerging market countries) and innovation.
Within the last year, though, we’ve also seen a real shift in the way that we think about the health care industry—and specifically biotech companies. I think that COVID-19 and the pandemic really brought to light the need for funding private life science companies, which are essentially biotech companies.
A manager I listened to recently was talking about the increase in funding for biotech companies. In 2011, net funding was about $1 billion. Last year, it was $14 billion. And this year, it is on track to be somewhere over $20 billion. This is major tailwind for the sector long term because the more funding there is, the more companies there are that have the chance to come out with groundbreaking treatments and medications.
This is expanding the opportunity for health care investors. Although biotech has underperformed a little bit this year, it couldn’t be a better time for a health care investor to be stockA financial instrument giving the holder a proportion of the ownership and earnings of a company. picking.
*Webinar recorded after the market closed on Wednesday, July 28, 2021.
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