The investment trust analysts note that healthcare has been a dull-performing sector since the late 1990s but there are signs this may be changing.
Wins cites key drivers for the sector – such as ageing populations, and growing middle classes in emerging markets – yet despite the increased popularity of healthcare companies, valuations remain around historic lows.
Still, Wins believes in order to maximize the potential on offer in this area, investors can benefit from a specialist approach, particularly in relation to the biotech subsector.
There are four investment trusts focused on healthcare, ranging from pure biotech, through to investing across the healthcare spectrum including biotech, large pharmaceuticals, medical devices and healthcare services.
“There are also a number of open-ended funds specialising in this sector, but the better performing investment trusts have outperformed their open-ended peers,” Simon Elliott, head of investment trust research at Wins, says.
In the IMA’s Specialist sector some of the best performing open-ended funds over six months to 27 July are healthcare mandates. Ranked third in the sector is Franklin Biotechnology with a gain of 9.22% while Axa Framlington Health is fifth in the sector on returns of 8.18%.
Meanwhile in the AIC’s Healthcare and Biotech sector, Frostrow Capital’s Biotech Growth has gained 17.85% while Worldwide Healthcare has returned 10.89%.
Elliott adds: “Given the fundamentals of the healthcare sector, and undemanding valuations, we see scope for the recent outperformance continuing into the medium term. We view specialist investment trusts as the ideal vehicles for exposure to this theme. These funds benefit from experienced, specialist managers, and we believe they are well-placed to outperform the broader healthcare sector.”
