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Quarter-End Insights

Healthcare Sector Less Appealing After Market Rebound

Changes to U.S. healthcare policy no longer a major fear.

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Morningstar's US Healthcare Index has increased 12% over the trailing 12 months, as global concerns regarding the coronavirus eased significantly in the second quarter. Additionally, the returns have outperformed the broader equity market performance of an 8% gain. We believe the solid underlying fundamentals of the healthcare sector are supporting the returns. Also, the defensive nature of healthcare is likely supporting relative returns, as concerns around recessions and other coronavirus impacts weigh more heavily on other sectors. On the policy front, we expect investor attention to return to potential changes in the U.S. with the upcoming elections. However, the fears of major healthcare policy change in the U.S. appear to have faded, with the more moderate Joe Biden the presumptive Democratic nominee for president.

Healthcare sector index versus market index. - source: Morningstar

Damien Conover does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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