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Healthcare Innovation Monthly Report | February

  • COVID continues to fast track digital healthcare adoption rates.       
  • Large number of WELL’s holdings benefiting from increased COVID spending and insurance coverage.       
  • Cloud-based Hospital spending booms, enabling new health-tech products and services.       
  • Gene Sequencing and Biotech has been rerated due to the Pandemic and sources for vaccines.        
  • Remote Wearables/Trackers and Telemedicine are showing the most impressive growth rates.        
  • Biden’s administration is set to unleash huge US government healthcare spending.

 

Healthcare Innovation ETF (WELL) Returns

January

12 Month*

1.03%

32.45%

Past performance is no guarantee of future performance. Source: Bloomberg, Solactive, HANetf *12 Month figures based on 31.01.20 - 31.01.21.

 

Performance Review

HAN-GINS Indxx Healthcare Innovation ETF (WELL) gained 1.03% in January – posting a 32.45% gain over 12 months.

The leading subtheme contributors to these gains continues to be in Medical Devices, Genome Sequencing, Biological Engineering (Biotech) and Neuroscience. They represent all of the 10 best performing holdings in January.  Biotech’s main contributors were led by Quidel (up 39.7%), GW Pharma (32.1%) and BeiGene Ltd (23.8%), plus Regeneron (4.3%).  

Device makers who contributed most included Penumbra (up 49.2%), Accelerate Diagnostics (35.4%), MicroPort Scientific (29.3%), InMode Ltd (24.0%) and Anglo Dynamics (22.2%). 

Other key contributors include Genome leader Myriad Genetics (up 39.3%) and Neuroscience firm Omeros Corporation (up 36.2%).  These subthemes have all enjoyed reratings due to COVID’s recent second surge.  Expected healthcare spending by the Biden administration has boosted medical devices.  Fast-track adoption of digital medical services, gene editing and remote medicine drove gains in Trackers and Telemedicine.  

Past performance is no guarantee of future performance. Source of all data: Bloomberg / HANetf. Data as of 31.01.2021

 

Top Performing Constituents

Company Name

Sub-Themes

January 2021 Return

Penumbra, Inc.

Medical Devices

49.19%

Quidel Corporation

Biological Engineering

39.70%

Myriad Genetics, Inc.

Genome Sequencing

39.32%

Omeros Corporation

Neuroscience

36.23%

Accelerate Diagnostics, Inc.

Medical Devices

35.36%

GW Pharmaceuticals PLC Sponsored ADR

Biological Engineering

32.11%

MicroPort Scientific Corp.

Medical Devices

29.32%

InMode Ltd.

Medical Devices

23.97%

BeiGene, Ltd. Sponsored ADR

Biological Engineering

23.84%

AngioDynamics, Inc.

Medical Devices

22.24%

 

Past performance is no guarantee of future performance. Source: INDXX. Data as of 31.01.2021

 

HAN-GINS Indxx Healthcare Innovation UCITS ETF

– Performance As of 31.01.21

 

1M

3M

6M

YTD

12M

SI

HAN-GINS Indxx Healthcare Innovation

1.03%

14.33%

11.94%

1.03%

32.45%

43.52%

Indxx Advanced Life Sciences & Smart Healthcare Thematic Indxx (NTR)

1.02%

14.41%

12.13%

1.02%

33.31%

45.40%

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: Bloomberg / HANetf. Data as of 31/01/2021

 

Industry News

COVID is forcing healthcare systems to innovate, fast-tracking digital health adoption rates. Cloud-based hospital spending is enjoying a boom and enabling new health-tech products and services.  Gene Sequencing and Biotech areas are seen as increasingly mainstream for healthcare solutions such as vaccines.  This has led to a rerating across these areas. Remote Wearables/Trackers and Telemedicine is experiencing a huge surge due to private and government insurance now covering such procedures.  Telemedicine is on track to grow by over 30% annualised between 2021-2025[1]

 

For illustrative purposes only. Source: https://www.emarketer.com/content/us-telemedicine-users-will-surpass-40-million-this-year

 

New Health-tech products and services are benefiting from the growth of Machine Learning (ML), and the Cloud/Internet of Things (IoT).   These key areas of growth include:

  • Digital medical devices      
  • Cloud-based healthcare (includes remote monitoring, telemedicine, wearables)      
  • Genomics Editing/Sequencing        
  • AI and deep learning

 

Constituent News

WELL currently has 110 constituents, with the US country weighting at 81.1%. It is followed by Japan (4.9%), Switzerland (3.4%), China (3.1%) and the UK (2.3%).  Medical devices are the largest subtheme in the WELL ETF with a 57.0% weighting, followed by Biological Engineering at 22.8% (includes Biotech), Genome Sequencing (7.5%), Neuroscience (6.6%) and Robotics (4.88%). The leading contributors to WELL’s performance included two Neuroscience firms – Biogen and Neurocrine Biosciences (see table). 

A number of midcap holdings are amongst WELL’s leading contributors.  Subthemes that contributed most to this month’s performance are:  Biological Engineering (Biotech), Genome Sequencing and Neuroscience.

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- January 2021

Company Name

Sub-Themes

January (Contribution to Return)

Illumina, Inc.

Genome Sequencing

0.70%

Biogen Inc.

Neuroscience

0.70%

Quidel Corporation

Biological Engineering

0.39%

Penumbra, Inc.

Medical Devices

0.35%

Alnylam Pharmaceuticals, Inc

Biological Engineering

0.32%

BeiGene, Ltd. Sponsored ADR

Biological Engineering

0.28%

Regeneron Pharmaceuticals, Inc.

Biological Engineering

0.19%

Neurocrine Biosciences, Inc.

Neuroscience

0.19%

Hologic, Inc.

Medical Devices

0.17%

GW Pharmaceuticals PLC Sponsored ADR

Biological Engineering

0.14%

 

Sub-Themes

January Return

Weighting

Bioinformatics

0.1%

0.52%

Biological Engineering

0.9%

22.79%

Genome Sequencing

0.8%

7.53%

Healthcare Trackers

-0.1%

0.70%

Medical Devices

-0.5%

57.01%

Neuroscience

0.8%

6.56%

Robotics

-0.4%

4.88%

Past performance is no guarantee of future performance. Source: INDXX. Data as of 31.01.2021

 

Outlook

Healthcare Cloud spending has allowed Telemedicine to flourish during COVID.  This is only expected to grow due to the convenience factor.  Globally most mainstream medical insurance plans now include insurance for Telemedicine.  In the US this is predicted to lead to a triple-fold increase in the number of such patients by 2023 to 64 million, from just 21 million in 2019.  The annual growth rate in 2020 was almost 100%.[2]

Past performance is no guarantee of future performance.

We also expect Gene Sequencing and Robotics players (Intuitive Surgical) to enjoy significant growth as genomics become increasingly mainstream across the medical field:  robotic surgery leads to less infections and reduced hospital stays.  Healthcare Trackers/Wearables are increasingly popular too. We expect Big Tech to become increasingly active in this space.

 

Product Details

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

The 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.

Visit the WELL Fund Page for more information.

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