Learn more about our Health ETF
Key Takeaways
- Google[1]
& Microsoft[2] both
announced huge deals recently (HCA & Nuance).
- COVID has been a huge gamechanger for Tech &
Healthcare industry
- The pandemic has fast-tracked digital adoption
across Telemedicine, Data/Analytics, Wearables, Biotech, Gene Editing &
Robotics.
- Cloud-based hospital spending is one of the
fastest growing sectors of the IT space.
- Biden’s $6 trillion budget[3]
is likely to result in big US Govt healthcare spending and insurance plans as
the industry embraces digital health.
- Gene Editing & mRNA therapeutics are
increasingly mainstream following the COVID vaccine success and Biden’s support.
Performance Review
Health ETF performance
May
|
12 Month*
|
-3.44%
|
19.73%
|
Past performance is no guarantee
of future performance.
Source: Solactive, HANetf
* 12
Month figures based on 31.05.20 - 31.05.21. as fund performance.
HAN-GINS Indxx Healthcare Megatrend UCITS ETF (WELL) lost
3.4% in May. It is up 19.7% over 12
months and has rebounded during June showing overall positive gains for 2021.
The leading subtheme contributors to these gains continues
to be in Biological Engineering (Biotech), Genome Sequencing and Medical Devices.
They represent the majority of the 10 best performing holdings in May. (See table
below).
For 2021, a key theme is the merging of Tech and
Healthcare. Large recent deals by Google
and Microsoft shows the digital revolution is moving into the healthcare space
aggressively.
We expect further acquisitions in this space[4]
from Big Tech who are driving up valuations across Healthcare, particularly in
the genomics, biotech, trackers/wearables and telemedicine space. US government spending on gene sequencing via
the Biden stimulus plan is likely to boost this area further.
The global genomics market size was valued at USD 20.1bn in
2020 and is expected to expand at a compound
annual growth rate (CAGR) of 15.35% from 2021 to 2028.[5]
Company Name
|
Sub-Themes
|
May
|
SONOVA HOLDING AG
|
Medical Devices
|
20.07%
|
MICROPORT SCIENTIFIC CORP
|
Medical Devices
|
15.77%
|
INTRA-CELLULAR THERAPIES INC
|
Biological Engineering
|
14.46%
|
QUIDEL CORP
|
Biological Engineering
|
12.71%
|
RESMED INC
|
Medical Devices
|
9.51%
|
STRAUMANN HOLDING AG
|
Medical Devices
|
9.42%
|
PEPTIDREAM INC
|
Biological Engineering
|
9.41%
|
ACADIA PHARMACEUTICALS INC
|
Neuroscience
|
8.66%
|
JAZZ PHARMACEUTICALS PLC
|
Biological Engineering
|
8.35%
|
UNIQURE B.V.
|
Genome Sequencing
|
7.62%
|
Past performance is no guarantee of future performance. Source:
INDXX. Data as of 31.05.2021
HAN-GINS Indxx Healthcare Innovation
UCITS ETF – Performance (As of 31.05.21)
|
1M
|
3M
|
6M
|
YTD
|
12M
|
SI
|
HAN-GINS Indxx Healthcare Megatrend
|
-3.44%
|
-1.06%
|
5.32%
|
-0.68%
|
19.73%
|
41.09%
|
Indxx Global NextGen Healthcare Index (NTR)
|
-3.44%
|
-0.98%
|
5.46%
|
-0.58%
|
20.21%
|
43.10%
|
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 31/05/2021
Industry News
Connectivity and digitalization are the future of healthcare: Wearable devices that provide real-time
tracking of various aspects of health, including sleep and physical activity, are
seeing a surge of investment. The global wearable medical devices market
reached $16.6bn in 2020, with an expected compound annual growth rate of 26.8%
between 2021 and 2028.[6]
The Pandemic has boosted Cloud-based hospital spending - speeding
up digital transformation beyond just Telemedicine. Data management is being
upgraded as Healthcare Analytics becomes a fast-growing subtheme. Big Tech players are targeting this space as
seen with the recent Nuance-Microsoft $16bn deal.[7]
The US healthcare industry is embracing new treatments in a
drive to enhance productivity and offer more precision medicine. The two big winners that have enjoyed upward
reratings are Gene Sequencing and Biotech companies.
CRISPR gene editing is
enabling the development of innovative therapies. It makes it much easier to
determine the genes and proteins that cause or prevent disease. Consequently, it helps identify new targets
for potential drugs. As of the 2nd quarter 2020, there were 724
active companies globally focused on developing CRISPR technology and almost 50
clinical trials involving CRISPR.[8]
mRNA has been a huge
breakthrough during COVID, providing key vaccines at record speed. The potential
is huge for mRNA and includes therapies being developed to treat malaria,
cancer and multiple sclerosis. It’s
likely more mRNA-based vaccines will be created to fight a host of future
infectious diseases. As of February 2021, CB Insights reports more than 520
ongoing clinical trials worldwide that were applying mRNA technology to more
than 20 disease classes.[9]
Innovation is a critical
driver in the healthcare sector. Increasing rates of innovation can be seen in
the sharp rise of U.S. patents granted for pharmaceuticals and medical devices
in recent years. Between 2013 and 2019, more than 60,000 pharmaceutical patents
and more than 125,000 medical device patents were granted. Today, there are
more than 18,500 drugs at various stages of the development process worldwide.[10]
The medical device
industry, projects revenues of $54.5 billion over the next four years – it
remains a key innovation player. (Source: Curran, J. (2020, August). Medical
Device Manufacturing in the US. IBISWorld.)
Such growth is catching
the attention of investors. In 2020, health tech startups raised approximately
$14 billion in venture capital funding, nearly double that of 2019. (Source: Micca,
P., Gisby, S., Chang, C., & Shukla, M. (2021, February 26). Trends in
Health Tech Investments: Funding the Future of Health. Deloitte Insights.)
CB Insights estimates
there are now 51 healthcare unicorns, defined as startups valued at $1 billion
or more.
HEALTH-TECH VENTURE FUNDING REACHED RECORD LEVELS IN 2020
For
illustrative purposes only. Source: Deloitte analysis of Rock Health’s Digital
Health Funding Database: https://www.wraltechwire.com/2021/06/15/a-pandemic-positive-technology-is-turbocharging-life-science-innovation/
Constituent News
In April our Health ETF expanded its underlying themes to
include standalone themes Telemedicine and Healthcare Analytics.
At least 100 holdings will always comprise WELL. Gene Sequencing and Biotech’s
weightings have risen, while Medical Devices saw its weighting decline.
Key changes include the following:
- Holdings now all equally weighted - emerging
healthcare well represented.
- Biotech, Genomics, Healthcare Analytics &
Telemedicine - larger now
- Good exposure to Large, Small- and Mid Cap
stocks.
- Increasingly global – with the US at 71%. Asia
17% and Europe 12%.
- Benchmark holds minimum 100 companies, plus an
ESG screen.
This ensures more innovative smaller players receive a
slightly larger weighting than before.
An ESG screen has also been added.
A total of 10 subthemes are now covered by WELL:
- Robotics
- Nanotechnology
- Genome Sequencing
- Healthcare Trackers
- Biological Engineering (Biotech)
- Bioinformatics
- Neuroscience
- Medical Devices
- Telemedicine
- Healthcare Analytics
WELL’s broad holdings have helped it participate in strong
gains across Telemedicine, Healthcare Analytics and Medical Device themes.
- WELL is increasingly global - the US represents 71%.
Japan 7.2%, China 6.6% and Switzerland 3.3% follow as our largest country weights.
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 continues to boost WELL’s holdings in the medical device and
biotech areas.
Top Contributors – May 2021
Company Name
|
Sub-Themes
|
May (Contribution to Return)
|
SONOVA HOLDING AG
|
Medical Devices
|
0.19%
|
MICROPORT SCIENTIFIC CORP
|
Medical Devices
|
0.15%
|
INTRA-CELLULAR THERAPIES INC
|
Biological Engineering
|
0.14%
|
QUIDEL CORP
|
Biological Engineering
|
0.12%
|
RESMED INC
|
Medical Devices
|
0.09%
|
STRAUMANN HOLDING AG
|
Medical Devices
|
0.09%
|
PEPTIDREAM INC
|
Biological Engineering
|
0.09%
|
ACADIA PHARMACEUTICALS INC
|
Neuroscience
|
0.08%
|
JAZZ PHARMACEUTICALS PLC
|
Biological Engineering
|
0.08%
|
UNIQURE B.V.
|
Genome Sequencing
|
0.07%
|
Sub-Themes
|
YTD
|
May
|
Weight
|
Telemedicine
|
-1.76%
|
-0.84%
|
5.56%
|
Genome Sequencing
|
-3.06%
|
-1.66%
|
19.11%
|
Medical Devices
|
1.41%
|
-0.15%
|
27.25%
|
Neuroscience
|
-0.25%
|
-0.25%
|
7.22%
|
Bioinformatics
|
0.03%
|
-0.30%
|
4.31%
|
Biological Engineering
|
-0.91%
|
0.12%
|
24.69%
|
Healthcare Analytics
|
0.18%
|
-0.10%
|
8.76%
|
Robotics
|
-0.26%
|
-0.16%
|
1.85%
|
Healthcare Trackers
|
-0.81%
|
-0.06%
|
1.24%
|
Past performance is no guarantee of future performance. Source:
INDXX. Data as of 31.05.2021
Outlook
WELL’s benchmark has benefited significantly from large
holdings across three key subthemes – typically all above 20% weightings. These
include Genome Sequencing. Medical Devices and Biological Engineering
(Biotech).
The chart below shows WELL’s benchmark outperformance versus
competitor HEAL since 2016. The major
outperformance has occurred in the past 2 years due to the large subtheme holdings
referenced above.
The recent Nuance deal reinforces the fast-growing
Healthcare Analytics and AI-Software theme in medicine. Key features that this deal highlights for
the future of healthcare include:
- Nuance digitizes doctors & hospital
conversations from patient visits – facilitates clinical documentation.
- Nuance’s speech-recognition software capitalizes
on demand for better Healthcare software.
- Microsoft’s Cloud (Azure) - ensures Nuance’s
software become more easily accessible globally.
The Cloud Healthcare market
is expanding rapidly across hospitals[11]
– and is likely to dominate IT spending in this space for the next few years. Cybersecurity
spending is also likely to see a big increase in the healthcare space - as
privacy concerns and potential hacks, increasingly concern most hospital groups.

For illustrative purposes only. Past performance is no
guarantee of future performance. Source: Bloomberg. Data as 0f 31/05/2021
Learn more about the HAN-GINS Indxx Healthcare Megatrend Equal Weight UCITS ETF here