Healthcare Innovation Monthly Report | June

Key Takeaways: Healthcare Innovation ETF 

•  WELL’s key monthly contributors were represented across all its subthemes – led by iRhythm 7.1% (Tracker), 1 Life 2.9% (Telemedicine), BICO AB 1.2% (Biotech), Schrodinger 1.1% (Bioinformatics), Ping An 1% (Telemedicine), CRISPR Therapeutics 0.9% (Gene Sequencing), Olympus 0.7% (Medical Devices) and Neurocrine Biosciences 0.4% (Neuroscience)
• Holdings remain increasingly global, helped by our equal weighted approach: US 67.3%, Japan 8.2%, China 5.7%, Switzerland 3.4% and Netherlands 2.1%. (Source: HANetf May 2022; Fact Sheet - WELL)
• Due to persistent high inflation - all 9 subthemes continue to suffer declines – led by Gene Sequencing and Healthcare Analytics.
• WELL’s returns are driven by Medical Device holdings (30.6% weight), Biotech (28.2%), Genome Sequencing (13.1%), Neuroscience (10.7%) & Telemedicine (6.2%).
• Due to price compression, Gene Sequencing’s weight has come down in favour of Neuroscience. Trackers remain small at just 2.4%. 

Please note that all performance figures are showing data. Past performance is no guarantee of future performance. Source of all data: Gins Global.

Macro Outlook:

• The Adoption Rate of Digital Health tools is growing rapidly.  Telemedicine, Health Tracking and Wearables show a significant gain in 2020 during COVID – from prior years. (Stanford, see chart below)
• With healthcare costs rising to new highs – we expect digitalization will become increasingly mainstream for treating aging populations across the industrialized world. [1]

• With stock valuations under significant pressure in 2022 – we expect more M&A/corporate activity.
• Big Tech’s robust balance sheets – means they are likely to be increasingly active across the Healthcare Innovation space. Oracle’s $30bn Cerner digital data deal is a prelude to more (electronic medical records). [2]
• High inflation and rising interest rates continue to hurt valuations – Gene Sequencing, Bionformatics, Healthcare Analytics and Telemedicine subthemes are most impacted.
• US midterm elections likely to see Republicans retake Congress.  Will adopt more business-friendly approach to Healthcare Deals =- boosting corporate activity. [3]
• Once the US Fed rate rises approach their ceiling – we expect valuations to recover.
• Surge in hospital Cloud Computing usage - a key booster of healthcare digitalization; embracing Telemedicine and Wearables. [4]
• Healthcare is highly fragmented and labour intensive – driving Tech Innovation/Disruption.
• With the US baby-boomer generating aging into their 70s and 80s, it is expected that there will be increased healthcare demand.
• Oracle’s purchase of Cerner serving doctors/patients ($30bn), Microsoft’s $26bn Nuance Communications acquisition & Google Cloud’s digitalization deal with one of the largest US hospital groups (HCA Healthcare 2000+ locations) – highlights increasing Tech adoption. [5]

Past performance is no guarantee of future performance. Please note that all performance figures are showing net data. Source: INDXX. Data as of 31.05.2022

Past performance is no guarantee of future performance. Please note that all performance figures are showing net data. Source: INDXX. Data as of 31.05.2022

HAN-GINS Indxx Healthcare Innovation UCITS ETF – Performance (As of 31.05.22)

Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg / HANetf. Data as of 31.05.2022. Please note that all performance figures are showing net data.

Learn more about our healthcare innovation ETF here.