The golden age has begun for investments in the health sector, Raiffeisen CM explains why

The view

The demand for services and products related to the sector benefits from the strong push of demographic trends and the recovery underway in many emerging countries, while innovation also plays a role

by Virgilio Chelli
April 26, 2024 1:00 pm

Health and wellness stocks are an exciting and promising area, but of course also risky. To invest successfully in the long term they are necessary good diversification at company level, business areas and trends, and specialist skills. A well-managed fund is ideal for this purpose, while a greater sense of responsibility and sustainability is also needed in this field. Raiffeisen Health and Wellbeing-ESG Equity makes its contribution and enables sustainable investments in companies in the health and well-being sector. Of course, this fund is also subject to the risks typical of stock markets, such as greater fluctuations and the possibility of price drops and capital losses.

A FIELD THAT ALSO INCLUDES WATER AND CLEAN AIR

This is the indication from Raiffeisen Capital Management that explains why the golden age for the has begun health care sector: the demand for health-related services and products continues to grow in the long term thanks to the trends of demographic change, while many areas of the world still do not have access to basic care or enjoy it to a very limited extent. There is great potential for recovery and growth, especially in many Emerging Countries, and this creates great potential. Investments in health, water and clean air always prove profitable in the long term, and health and well-being represent one of the 17 UN Sustainable Development Goals.

ARTIFICIAL INTELLIGENCE POWERFUL ACCELERATOR

Another aspect that makes investments in healthcare very interesting, underlines Raiffeisen CM, is the high degree of innovation and technological progress, as shown by the developments in drugs, in diagnostics, medical devices, telemedicine and remote surgery, where innovations are redefining the landscape. L’artificial intelligence in particular it can act as an accelerator because drugs could be developed more quickly and with a much higher probability of success than in the past. Even cancer may soon be treated with unprecedented success rates, and it may even be possible to slow aging.

PHARMACEUTICAL IMPORTANT BUT NOT THE ONLY COMPONENT

But what should the investor consider? The focus is usually on biotech and pharmaceutical companies, whose stock prices can multiply rapidly if a new drug is successfully developed. But for every success there are numerous failures, and stocks can also suffer heavy losses. According to Raiffeisen CM, to recognize in time who will be successful and who will not require “a great deal of experience and also a bit of luck”. It’s one of the reasons why Pharmaceutical companies are an important component of a good health-care equity fund, but not the only one. In addition to selection, a good mix of sub-sectors is also a success factor.

SUSTAINABILITY NOT ALWAYS OBTAINED

Sustainability is also not a given in the healthcare sector, which after all contributes more than any other to improve people’s life expectancy and quality of life. But in the past it has not been an example of sustainability: controversial tests on animals, excessive lobbying, conflicts of interest, corruption and excessive drug prices are just some of the problems that according to Raiffeisen CM contribute to the fact that the pharmaceutical industry does not always enjoy good reputation. Working conditions and wages have also been criticized for a long time, but it is possible and even more important to apply the lever of sustainability also to investments in healthcare.

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