There’s an emerging intersection between healthcare and technology, with the former’s evolution largely dependent on the latter.
For investors who want exposure to that theme without the burden of stock-picking, some exchange traded funds are levered to the intersection of healthcare and technology. However, this is an arena where selectivity matters, and active management can offer benefits.
Enter the Goldman Sachs Future Health Care Equity ETF (GDOC). GDOC, which debuted last November, could prove to be at the right place at the right time for long term-minded healthcare investors looking to capitalize on the next wave of tech-driven growth in this sector.
“We are now at a critical inflection point. Rapidly accelerating innovation is doing more than delivering vaccines in record time. It is reshaping the entire health care industry. Over the last few decades, cost curves have declined dramatically and groundbreaking new treatments have become commercially scalable, prompting the industry to change how it treats patients by shifting the focus from reactive to preventive medicine,” noted Goldman Sachs Asset Management (GSAM).
GDOC holds 55 stocks, and while funds of this nature are usually concentrated, active management allows GDOC to spread its wings a bit. The Goldman Sachs ETF features exposure to basic biotechnology and pharmaceuticals companies as well as growthier genomics an medical devices names, among others.
That expanse levers GDOC to compelling themes with attractive long-term runways such as digital health and precision, just to name a pair.
“At the convergence of data science and lab science lies precision medicine, the development of personalized treatments and therapies based on a patient’s genetic makeup or other molecular or cellular analysis,” added GSAM. "Precision medicine can expand the horizon of available therapies for patients, such as targeted oncology and gene and cell therapy. This has important implications for the treatment of rare diseases, which afflict roughly 30 million people in the United States alone.”
Another area of the GDOC roster with long-term potential is genomics. Those names are out of favor today due to the growth stock slump, but amid declining costs, the future is bright for this corner of the healthcare sector.
“When the first human genome was sequenced in 1999, the process took roughly four years and cost an estimated $0.5 billion. Today, it costs around $600 and can be completed in as little as one day,” concluded GSAM. “Genomics—the science of reading, analyzing and editing genomes—has seen rapid expansion and development since its early days. This creates an opportunity to expand our knowledge about new treatments and cures.”
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