Industry Updates

‘Medicare for all’ campaign sees healthcare sector ETFs slump

George Geddes

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The US healthcare sector has been a strong revenue maker for the last few years and is seen as an attractive investment opportunity for many. But April has not been the sector’s best performing period and it is unlikely to improve any time soon.

Bernie Sanders is taking on Donald Trump for the 2020 presidential campaign in the US and has followed Trump’s predecessor, Barack Obama, to offer free healthcare the country’s population. The US is well known for its expensive healthcare, which can leave many of its hospitals’ patients with six-digits worth of debt.

Following Sanders’ announcement of his vision of ‘medicare for all’, the healthcare sector’s share prices tumbled dramatically. Despite Sanders being a year away from even potentially being elected in to office, the role of free healthcare has attracted a significant following and has questioned the impact it would have on private health insurance companies like UnitedHealth.

United Health Group is one of the largest holdings for a number of US Healthcare ETFs. The stock’s share price has fallen 7.5% over the course of April and similarly a number of ETFs which include the company has seen a similar result.

The Invesco Health Care S&P US Select Sector ETF (XLVP) has a one-year return of 13.1% but has been hindered by its performance over the last three weeks as its net asset value fell 6.7%. In addition to UnitedHealth, XLVP’s holdings include pharmaceutical companies Pfizer and Merck & co which saw their share prices fall 9% and 13.4%, respectively, over the same period.

Furthermore, the iShares S&P 500 Health Care Sector ETF similarly fell 6.8% throughout April as it and XLVP were the worst performing ETFs for last week.

On 4 April, ETF Stream revealed GinsGlobal Index Funds had once again teamed-up with HANetf to launch a healthcare innovations ETF, the HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL), which fell 5.5% in the week to 19 April.

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