Despite the underperformance in 2023, recent developments indicate a promising outlook for the healthcare sector in 2024. As the market adjusts to the economic landscape, healthcare may regain its position as a preferred sector for investors seeking stability amid uncertainty.
Delivering performance and cash flows
Despite the sector’s overall dip in 2023, the Harvest Healthcare Leaders Income ETF (HHL) remained one of the top performers in Canada. “The active covered call strategy certainly played a positive role when markets were volatile and had downward pressure,” MacDonald says, “HHL is one of the top performing healthcare ETFs in Canada over the past 1, 2, 3 years amidst a relatively challenging macro backdrop.
“The stock selection also has had a positive impact, selling select positions early, such as Pfizer Inc., and adding to areas that we saw more optimistic outlooks, such as in the tools and diagnostics areas and robotic assisted surgery equipment, had positive impact on the absolute and relative performance.”
Aging populations and technological innovation
MacDonald emphasizes the long-term view that underpins Harvest ETFs’ investment strategy. Aging populations, coupled with technological innovation in drugs and equipment, form the bedrock of their positive outlook for the sector. These demographic shifts not only drive increased healthcare spending but also create demand for innovative solutions to address age-related health issues.
The aging population represents a fundamental driver of healthcare demand, offering enduring investment opportunities. “As we age, we invariably spend more on our healthcare needs,” MacDonald observes. “This is one of our long-term key drivers.”
