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Betting on unloved healthcare stocks

Kelvin Tan Published on Mon, Sep 26, 2016 / 4:38 PM GMT+8

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Stinging criticism about high drug prices from US politicians has caused a slump in the share prices of pharmaceutical and biotech stocks over the past year. Will they take another big hit if front runner Hillary Clinton becomes the next US president? Which are the stocks and funds to bet on?

Global healthcare and biotechnology stocks, which have been on a downtrend since 3Q2015, are still stuck in the sickbay with negative returns for the year, despite the strong recovery in world equities of late. These two unloved equity sectors, as measured by the MSCI World Health Care and MSCI World Biotechnology indices, were down 2.38% and 8.53% respectively, on a year-to-date (YTD) basis as at Sept 2, while the MSCI World index was up 4.32%.

Among Singapore-registered equity unit trusts, global healthcare and biotechnology sector funds have also been the worst performers this year, with YTD losses ranging from 3.17% to 19.81% in Singapore dollar terms as at Sept 2, according to Morningstar data. And as at end-July 2016, equity healthcare funds suffered the biggest outflow ($251 million) in the Morningstar category of locally registered equity funds this year.