The U.S. healthcare sector is one which has provided investors with incredible returns in recent decades. As baby boomers continue to age, and technological and pharmaceutical advancements continue to extend the average lifespan of the public, expectations are generally still bullish for this sector to continue to provide the outside returns of the past.
In this article, I’m going to highlight reasons for owning an Exchange Traded Fund (ETF) tracking this sector in 2020, the SPDR Healthcare Select Sector Fund (NASDAQ:XLV).
Broadly speaking, the aforementioned secular aging trends covered above bode well for the health-care sector for sure, and ought to remain in focus for investors at all times. From a seasonal perspective, now is also, statistically speaking, the best time to build a position in this sector.
Government spending (COVID-19 related and otherwise) on the healthcare sector is going to continue to remain high for the foreseeable future, another bullish tailwind for the broad group of companies.
Taken together, the list of near to medium-term tailwinds for the healthcare sector is robust and I expect will have reverberations over the long run as any sort of health-care reform is likely to become overly cumbersome.
Typically, in election years like this, the healthcare sector is one many traders avoid due to uncertainty. The health-care sector has always been a popular political football to be kicked around on election years, but my expectation is that this coronavirus pandemic will result in a ceasefire on any such attempt at reform from either side of the aisle.
With complacency largely the friend of the health-care investor, this paves the way for another four profitable years, at least.
Invest wisely, my friends.
