In the Thematic Investing series, Tom Lydon, CEO of ETF Trends and ETF Database, alongside experts and innovators from Goldman Sachs, sheds light on one of the most popular alternative investments, thematics, and how they can benefit advisors and investors. In the third episode of the series, Lydon is joined by Jenny Chang, portfolio manager for the Goldman Sachs Future Health Care Equity ETF (GDOC ).
Chang opens by explaining GDOC, an actively managed ETF that focuses on innovation within healthcare. Goldman Sachs believes that the healthcare industry is at a pivotal point and that the next decade will be a “golden” one for the industry.
“Even before the pandemic, we were already seeing a lot of technological advancements happening in the space and the pandemic, if anything, really brought unprecedented attention and funding into the sector,” Chang explains.
A primary example of what increased funding has brought is the rapid development of the COVID-19 vaccine, which previously would have taken years to develop. It marks what Chang says is a structural change to the space, and GDOC is positioned to capture the disruption and innovation happening within healthcare.
The 4 Fundamentals of GDOC
GDOC focuses in four fundamental areas that Goldman Sachs believe can potentially revolutionize the sector: genomics, precision medicine, tech-enabled procedures, and digital healthcare. Genomics is at the core of the change being experienced within healthcare, as costs continue to be driven down by innovation. Genetic sequencing is now extremely affordable, and because it is more readily available, more discoveries and breakthroughs are happening as more sequencing occurs.
“As we know more and more about the genetic makeup, we’re able to personalize treatment to that person’s genetic makeup. As a result, we are finding cures for diseases that we didn’t think was possible before,” Chang says. “Over the next decade, we’re very excited because we think we’re going to see more and more of these types of next generation medicine such as gene therapy or gene editing, Alzheimer’s disease drugs, targeted oncology treatment, come to the market.”
There are currently 5,000 rare diseases in the world, and current cures only resolve 5% of those. The potential and opportunity for gene editing and gene therapy for finding more cures going forward is enormous, Chang explains.
Digital healthcare, where technology and healthcare intersect, is the last area that Goldman Sachs sees enormous potential in going forward. Technology such as connected diabetes devices that allow for patients to take readings and measurements at home that are then conveyed to their doctors, and then allow for virtual appointments to plan health steps going forward highlight the potentials within the space. Other examples of exciting areas include robotics surgery and liquid biopsy.
“All of these technologies have one thing in common: it’s that they’re less invasive, so it shortens the hospital stay time, it’s less infection, it creates better patient outcome, but also lowers costs for the entire healthcare system,” Chang says. “We really view companies in this category as a sort of win/win for everybody, for all the stakeholders involved, and that’s why we’re invested in these companies and why we’re so excited.”
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