Healthcare Innovation Monthly Report | January

• COVID is accelerating global health systems transformation – fast tracking digital health adoption rates.
• Combatting COVID-19 is directly benefiting a large number of the holdings in our healthcare innovation ETF. 
• AI, Machine Learning and the Cloud are enabling new health-tech products and services. 
• Fast adoption rates of Gene Sequencing, Healthcare Trackers and Telemedicine is resulting in impressive growth rates. 
• Biden administration to unleash huge US government healthcare spending.

Performance Review

HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL) gained an impressive 6.04% in December- finishing the year with a 27.85% gain.   

The leading subtheme contributors to these gains have been in Medical Devices and Biological Engineering (Biotech) which represent 8 of the 10 best performing holdings.  Device makers who contributed most included Dexcom (up 15.7%), Edwards Lifesciences (8.8%), Boston Scientific (8.5%), Allign Tech (11.0%) and ABIOMED (18.3%). 

Biotech’s main contributors were led by BioMarin Pharma (up 11.4%), Sarepta Therapeutics (21.0%), Sysmex Corp (14.6%), Exact Sciences (9.5%) and Jazz Pharma (17.3%). 

Other key contributors included Robotics leader Intuitive Surgical (up 12.7%) and large Genome Sequencing firms Illumina (up 14.9%) and Adaptive Biotech (22.6%).  These subthemes have all enjoyed reratings due to COVID’s recent second surge. 

Healthcare Innovation ETF (WELL) Returns

Past performance is no guarantee of future performance.

Source: Bloomberg/HANetf *YTD figures based on 01.01.20 - 31.12.20 ** 12 Month figures based on 01.01.20 – 31.12.20

For 2020, a number of holdings exceeds 150% gains.  It is encouraging to see these gains being shared across a number of subthemes in our healthcare innovation ETF.  The fast-track adoption of digital medical services, gene editing and remote medicine has helped drive gains in Healthcare trackers, telemedicine, Gene Sequencing, Bioinformatics and Biotech holdings. Our Indxx benchmark has shown solid gains over the past 4 years – showing 23.53% annualised returns.  Its 12-month return is 28.79%.

Past performance is no guarantee of future performance.

Source of all data: HANetf, Bloomberg. Data as of 31.12.2020

HAN-GINS Indxx Healthcare Innovation UCITS ETF – Performance

Total Return NAV to Date (up to 31/12/2020)

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 31/12/20

Industry News

COVID is accelerating global health systems to transform and innovate. 2020 saw rapid increases in investment across medical well-being and care delivery innovators.

Key trends are the leveraging of AI, Machine Learning (ML), and the Cloud/Internet of Things (IoT) to enable new health-tech products and services.  The main areas of growth are summarized below:

• AI, machine learning, and deep learning
• Internet of Things (includes remote monitoring, telemedicine, wearables)
• Digital medical devices
• Genomics and sequencing

The following Health Tech Innovations are the ones we currently view as the most important:

• Smart inhalers (asthma suffers in particular)
• Robotic surgery (minimally invasive procedures)
• Wireless brain sensors (measures the temperature and pressure within the brain. Since the sensors are able to dissolve, they reduce the need for additional surgeries).
• 3-D printing (for implants, prosthetics etc).
• Artificial organs (grow within the patient’s body to replace original)
• Health wearables (tracks blood-sugar levels for diabetes patients, physical fitness, heartbeat, sleeping patterns etc) Fitbit, Apple 4 Watch devices
• Precision medicine (based on an individual’s genetic make-up)
• Virtual reality (helps in-patient rehabilitation and recovery, medical students etc).
• Telehealth (critical during COVID – providing remote medical care through their digital devices, instead of in person).  The global telemedicine market is expected to be worth $113.1 billion by 2025.[1] 
• CRISPR - the most advanced gene-editing technology yet. Awarded Nobel Prize in 2020. 

For illustrative purposes only.

Source:  www.gminsights.com/industry-analysis/digital-health-market

Constituent News

WELL currently has 107 constituents, with the US weighting dominating at 81.02%. It is followed by Japan (5.40%), Switzerland (3.48%), China (2.70%) and the UK (2.18%).  Medical devices remain the largest subtheme in the ETF with a 58.22% weighting, followed by Biological Engineering at 22.33% (includes Biotech). The leading contributors to WELL’s performance continued to be from these two large subthemes – see below.

Increasingly, more midcap holdings are amongst WELL’s leading contributors. A number of holdings across Genome Sequencing, Robotics, Neuroscience, Bioinformatics and Healthcare Trackers posted impressive double digit gains for December.  These subthemes are expected to benefit from significant increased US government healthcare spending under a Biden presidency.

Faster adoption rates of digital healthcare due to COVID – continue to boost WELL’s holdings in the device and biotech areas.

Top Contributors - December 2020

Past performance is no guarantee of future performance.

Source of data: INDXX. Data as of 31/12/20

Globally, the Gene Therapy market is expected to show a decade long market growth rate of 31.1%, annualised (CAGR).  While the US is currently the largest region, Asia-Pacific is expected to be the fastest growing region over the next decade.[2]

COVID-19 supply constraints are providing a boon to medical device and product manufacturers, particularly those focused on PPE, as well as older people continuing to embrace telehealth and telemedicine. However, tech companies will play a critical role in creating tools that impact the complexity of their care and chronic conditions. We predict see greater partnerships between tech and healthcare to address health equity within this vulnerable population. In a post-COVID-19 world, healthcare will be required to embrace technology to impact positive outcomes in the lives of patients and their families.

Fund Details

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

Our healthcare innovation ETF 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.

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