Where do certain industries rank, alongside other industries in today’s investment market? Today we will look at Health Care Vs All Ordinaries.
Whilst commercial property, and certain industrial property investments are outperforming markets, more & more investors are looking at alternative investments to add to their portfolio, with some industries outperforming others.
Let’s take a deeper dive into the Health Care sector.
In 2016, the S&P/ASX 200 Healthcare Index had returned 247% over the past 10 years, compared to just 54% for the All Ordinaries. Healthcare beat every other sector hands down. Australia is blessed with plenty of high-quality healthcare companies, many of which have delivered great returns.
The Australian share market is broken up into 11 Sectors, 24 Industry Groups, 68 Industries and 157 Sub-Industries. Companies are categorised according to their primary business activity following the Global Industry Classification Standard (GICS). As most established markets use GICS, investors can accurately compare the performance of Australian sectors/industries to those of other countries. Australia’s 11 GICS sectors each have a benchmark index that tracks the performance of ASX-listed companies in that sector.
In a 1992 letter to shareholders, Warren Buffett said: “Leaving the question of price aside, the best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return”.
Health care is one of those sectors
The primary health care industry of pathology, radiology and medical centres have continued to grow & develop, with Healius Ltd – formerly known as Primary Health Care continuing to have strong gains, with pains along the way. The $2B company, which operates 96 centres and day hospitals is going through a tough restructure, and recently raised $250M to fund its strategic growth, which includes a key technology play. Some predict a $30M cost cut, and others are questions about a possible M&A after dismissing a takeover by Chinese group Jangho.
In our opinion, technology is the key moving forward. There are a number of exciting healthcare shares that have a large technology element like Pro Medicus Limited (ASX: PME) and Volpara Health Technologies Ltd (ASX: VHT).
Umbrella Health will be the new player in the market providing patients with a new way to engage and be engaged via a tech play. The company, which will hold tech assets, a cash flow business with more than 30 sites planned, and property assets, Umbrella Health is ready to disrupt an industry that is ripe for disruption!