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Healthcare Innovation Monthly Report | June

  • Biological Engineering (Biotech) has boosted WELL’s performance - in the fight to combat COVID-19.
  • Many WELL holdings are at the forefront of vaccine research, supplying PPE materials and producing ventilators.
  • Innovative healthcare firms are benefiting from immediate healthcare changes (wearables, telemedicine, devices etc.)

 

Performance Review

HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL) recorded another excellent month of performance – gaining 9.4% for May, after posting a 12% return in April.

For the year 2020 it is up 6.06%, while over the past 12 months it has returned 25.3%.  During May the leading subtheme contributors to the gains have been in Biological Engineering, Medical Devices, Neuroscience, Robotics and Genome Sequencing.  (See Table) Medical Devices in particular had a very good May recovering almost all prior year losses.

For the 2020 year, Biologicial Engineering with its Biotech focus has dominated the subtheme performance, followed by Genome Sequencing, Neuroscience and Healthcare Trackers.

It is clear increased demand for remote healthcare (Telemedicine, Robotics, Wearables) and biotech/gene therapies - has played a key role in WELL’s stock portfolio gains.

During May WELL’s positive performance led it to significantly outperforming the MSCI World Health industry benchmark (see below).  Leading contributors were Regeneron (16.5% gain), Dexcom (12.9%), West Pharma (14.2%), BioMarin (15.8%). Quidel (25.9%), Illumina (13.8%) and Livongo Health (49.8%).

During 2020, many of these same holdings have been the largest underlying contributors to performance.  For the year to date period, WELL’s leading contributors were as follows:

Regeneron (64.1%), DexCom (72.5%), West Pharma (42.4%),  Quidel Corp (134.0%), Livongo Health (137.6%), Seegene (253.7%) and bioMerieux SA (60.1%).

 


May


YTD
*


12 Month


9.38%


6.06%


25.28%

Past performance is no guarantee of future performance.
Source: Bloomberg/HANetf
*YTD figures based on 01.01.20 - 31.05.20

 

Sub-theme Performance

YTD

May

Biological Engineering

5.35%

2.92%

Healthcare Tracker

0.39%

0.13%

Neuroscience

0.57%

0.56%

Nanotechnology

0.00%

0.00%

Bioinformatics

-0.03%

0.00%

Genome Sequencing

0.58%

0.70%

Robotics

-0.13%

0.62%

Medical Devices

-0.50%

4.04%

YTD Performance

6.1%

May Performance

9.4%

Past performance is no guarantee of future performance Source: INDXX. Data as of 29/05/20

 

WELL vs MSCI World Health Index YTD (01.01.20 - 30.05.20)

 

HAN-GINS Indxx Healthcare Innovation UCITS ETF 2020 Performance – YTD (04.04.19 - 29.05.20)

 

 

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. 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: INDXX. Data as of 29/05/20

 

Constituent News

Currently WELL has 103 constituents, with the US country weighting dominating at 84%.  There exist eight underlying subthemes, led by Medical Devices (55%), Biological Engineering (27%) and Neuroscience (8%).  This is followed by Healthcare Trackers, Gene sequencing and Robotics.

Continued adoption of WELL products in the fight against the novel Coronavirus, has helped ensure good performance.  The pandemic has exposed many flaws in the US healthcare system.  It highlights the benefits of streamlined regulation and innovation in areas such as telemedicine and digital health technologies.  

Tech companies will play a bigger role in meeting the need for greater transparency of data and individual electronic health records.   Trends to watch include accelerated development of the Individual Patient Record, as health-care companies build data registries.  Also the use of wearables and other consumer-facing technology may increase post-pandemic, integrating data from these devices with individual medical records.  WELL is positioned to benefit from these trends.  Not surprisingly it’s now up 25.3% over the past 12 months. 

Positive Impact on WELL:

Telehealth / Virtual care – Companies providing virtual services are becoming the standard of care in this environment as providers are limiting in-person visits to acute, emergent cases.

Home health – Companies providing in-home care have seen volume increase as self-quarantine becomes more pervasive across the country and the globe.

Medical device and product manufacturers – supply constraints are providing a boon to medical device and product manufacturers, particularly those focused on ppe & devices related to the pandemic (e.g., gloves, masks, respirators).

Prior to COVID - usage of telehealth services was estimated to be in the single digits in the US - largely in the areas of mental health. But according to a survey from IMS Health (US healthcare data provider) - telehealth services used by clinicians surged past 50% in April. 

Source: https://www.morganstanley.com/ideas/coronavirus-us-healthcare-trends

  • US Government Medicare insurance (reimbursement) rules have already broadened to include various telehealth services.  This ensures Medicare insurance will pay for virtual care now.  Post-COVID, analysts expect hospitals to shift a larger volume of patient care to telehealth.

Latest trends show that main telehealth diagnoses include - diabetes, hypertension and cholesterol.  Longer term, the shift will drive lower medical costs, benefitting payors and plan sponsors.  The US already spends more than twice on healthcare per capita - than the average OECD country.

Source: https://www.morganstanley.com/ideas/coronavirus-us-healthcare-trends

  •  Digital health technologies could see accelerated adoption. Digital pharmacies could deliver opportunities for investors, and major e-commerce companies will likely speed up entry into the health-care marketplace. 

In summary, key future Healthcare changes we see include:

  • An explosion of telehealth visits.
  • Remote inpatient consults and family visits.
  • Online scheduling and the automation of patient triage.
  • Artificial intelligence to allocate resources and make clinical decisions.
  • Supporting remote work and communication for team members.
  • Mobilizing teams to create PPE (equipment).
  • Ensuring connectivity at remote COVID-19 testing sites and expanding capacity. 

An example of such change is New York – it has finally put all area hospitals into a single statewide system, enabling the sharing of patient data, equipment and supplies, as well as doctors. Digital platforms that leverage the IoT and enable orchestration between machines and humans will make care more efficient.  These will be expectations and not nice-to-haves going forward.

In the future, healthcare consumers will expect their pharmacies and home assistants such as Alexa to integrate with their health records and trigger actions.

 Our largest holding Regeneron has identified hundreds of virus-neutralizing antibodies; plans to initiate large-scale manufacturing with antibody cocktail therapy.  This biotech leader is at the forefront of the race to find a vaccine for COVID-19.

Top 20 May Performance Contributors (Holdings) – ranking by % contribution

 

Price Performance

Contribution to Return

Company Name

Sub-Themes

YTD

May

YTD

May

Regeneron Pharmaceuticals, Inc.

Biological Engineering

64.14%

16.53%

2.72%

0.70%

DexCom, Inc.

Medical Devices

72.45%

12.86%

1.96%

0.35%

West Pharmaceutical Services, Inc.

Biological Engineering

42.38%

14.15%

0.64%

0.21%

BioMarin Pharmaceutical Inc.

Biological Engineering

26.78%

15.79%

0.56%

0.33%

Quidel Corporation

Biological Engineering

133.96%

25.90%

0.49%

0.09%

Illumina, Inc.

Genome Sequencing

11.02%

13.80%

0.41%

0.52%

Livongo Health, Inc.

Healthcare Tracker

137.63%

49.79%

0.40%

0.15%

Bio-Rad Laboratories, Inc. Class A

Medical Devices

32.02%

11.64%

0.35%

0.13%

ABIOMED, Inc.

Medical Devices

32.63%

17.07%

0.34%

0.18%

Fisher & Paykel Healthcare Corporation

Medical Devices

24.95%

10.24%

0.30%

0.12%

QIAGEN NV

Biological Engineering

29.06%

5.04%

0.29%

0.05%

bioMerieux SA

Biological Engineering

60.13%

15.62%

0.29%

0.08%

Alnylam Pharmaceuticals, Inc

Biological Engineering

17.00%

2.71%

0.29%

0.05%

Olympus Corp.

Medical Devices

11.55%

7.58%

0.27%

0.18%

Sysmex Corporation

Biological Engineering

16.36%

14.78%

0.24%

0.21%

Sarepta Therapeutics, Inc.

Biological Engineering

17.96%

29.17%

0.23%

0.37%

Biogen Inc.

Neuroscience

4.37%

3.46%

0.22%

0.17%

Neurocrine Biosciences, Inc.

Neuroscience

15.20%

27.12%

0.20%

0.36%

Shandong Weigao Group Medical

Medical Devices

48.76%

14.71%

0.19%

0.06%

ACADIA Pharmaceuticals Inc.

Neuroscience

20.85%

2.84%

0.18%

0.02%

STERIS Plc

Medical Devices

9.35%

16.41%

0.16%

0.29%

Seegene, Inc.

Genome Sequencing

253.72%

23.53%

0.16%

0.02%

Source: FactSet, Indxx

 

Country Breakdown

Weights

United States

83.88%

Japan

5.60%

Switzerland

2.62%

United Kingdom

2.26%

New Zealand

1.38%

Australia

0.96%

Hong Kong

0.77%

France

0.73%

Sweden

0.55%

Denmark

0.35%

Italy

0.39%

India

0.27%

South Korea

0.24%

Dividend Yield

0.35%

 

Sub-theme

Weight

Medical Devices

54.88%

Biological Engineering

26.91%

Neuroscience

7.51%

Genome Sequencing

5.26%

Robotics

4.21%

Healthcare Tracker

1.07%

Bioinformatics

0.11%

Nanotechnology

0.04%

 

Top 10 Holdings

Country

Industry

Weights

Regeneron Pharmaceuticals, Inc.

United States

Biotechnology

6.50%

Biogen Inc.

United States

Biotechnology

4.92%

Edwards Lifesciences Corporation

United States

Medical Specialties

4.45%

DexCom, Inc.

United States

Medical Specialties

4.39%

Intuitive Surgical, Inc.

United States

Medical Specialties

4.21%

Illumina, Inc.

United States

Biotechnology

3.84%

Medtronic Plc

United States

Medical Specialties

3.80%

Agilent Technologies, Inc.

United States

Biotechnology

3.60%

Boston Scientific Corporation

United States

Medical Specialties

3.49%

Zimmer Biomet Holdings, Inc.

United States

Medical Specialties

3.36%

 Source of all data: FactSet, Indxx Data as of 29/05/20

Learn more about HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL)

HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL) is a UCITS compliant Exchange Traded Fund domiciled in Ireland.

WELL tracks the Indxx Advanced Life Sciences & Smart Healthcare Thematic Index (Net Total Return), an index designed to measure the performance of large, mid and small-capitalisation companies primarily listed on an exchange in Developed and Emerging Markets that are involved in the Advanced Life Sciences & Smart Healthcare sector.

Please remember that the value of your investment may go down as well as up and past performance is no indication of future performance. 

EXCHANGE

BB CODE

RIC

ISIN

CURRENCY

INCOME

London Stock Exchange

WELL LN

HAWELL.L

IE00BJQTJ848

USD

Acc

London Stock Exchange

WELP LN

WELP.L

IE00BJQTJ848

GBP

Acc

Borsa Italiana

WELL IM

WELL.MI

IE00BJQTJ848

EUR

Acc

XETRA

W311 GY

W311.DE

DE00A2PE7K4

EUR

Acc

SIX

WELL SW

WELL.S

IE00BJQTJ848

CHF

Acc

 

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