April 13, 2017
When you try to talk to investors about the health care sector these days, the discussion inevitably leads to the ongoing battle over Obamacare and the AHCA. The future is very uncertain for this sector, and investors have seen some volatile trading for ETFs tracking the broad market, such as XLV, or worries over pricing issues for funds in the biotech sector, like IBB.
And given the ongoing discussion for this sector, it is hard to say what the final outcome will be for Americans, or the stocks tracking this key market either.
How to Play This Situation
One thing that isn’t going to change about the health care industry going forward, however, is its continued adoption of technology. The health care world has been a bit slow to adopt new technological practices, but the area is finally coming on strong as of late.
Honestly, it is about time, as the area is definitely long overdue for a technological shakeup. Still, it can be hard to separate the areas of this market with high potential, and those that are just a passing fad. After all, there are plenty of buzzwords when it comes to the intersection of technology and health care, and like many things in health care, the jargon can be confusing.
Some of the latest buzzwords that investors have been talking about in this market include informatics, telemedicine, and even ‘cyborgization’, though some of these areas are definitely hitting the mainstream lately. But to get to the bottom of this story and to understand what is really going on with the adoption of technology in the health care world, I spoke with Andrew Chanin, the CEO of PureFunds. His company is probably best-known for its cybersecurity ETF (HACK), but they also have a suite of other sector-focused funds, including the PureFunds ETFx HealthTech ETF (IMED).
As such, he was able to shed some light on this interesting topic for the latest edition of the Dutram Report, and clue us in on why this market might be worth focusing in on now.
My Chat with Andrew
In the interview, Andrew and I discuss why it has taken so long for health care companies to adopt technology, and what they are doing about this lack of investment these days. Andrew and I also converse about the prospects of this corner of the market in today’s market environment, and if an Obamacare replacement will be a concern for investors in this area.
We also talk about IMED in a bit greater detail, and we dive into some of the fund holdings, such as Teladoc (TDOC). Additionally, we take a long at the large cap vs. small cap breakdown, noting how this fund might differ from some out there that are just focused on medical devices and companies like MDT, and how PureFunds’ IMED—which includes both device stocks like ISRG but also more software-oriented plays such as MDRX—could be a bit different for investors.
Lastly, we discuss how this might be an area for investors to focus on for growth, and what some of those buzzwords I mentioned earlier mean for investors right now. In particular, this idea of cyborgization could have transformative effects for many people out there, but that is really only the tip of the iceberg in this quickly-growing, but little-discussed health tech market.
Andrew and I also talk about why numerous companies are focusing in on this corner of the health care market now, and what investors need to know about how this sort of strategy might fit into a portfolio too. So, if you have been unsure of what to do with your health care investments in light of the legislative uncertainty, this podcast is definitely a must-listen.
But do you think health tech is the next hot area for investors in this sector? Listen to this edition of the Dutram Report and be the judge yourself. And make sure to write us in at podcast @ zacks.com or find me on twitter @EricDutram to let me know what you think of this interview, and health care investing as well.
But for more news and discussion regarding the world of ETFs, make sure to be on the lookout for the next edition of the Dutram Report, and check out the many other great Zacks podcasts as well!