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Personal health is arguably our greatest asset. Good health provides us hope, opens doors to pursue our passions, and allows us to enjoy life to the fullest. Around the world, healthcare has largely been adopted as a human right, with governments, individuals, and corporations investing ever increasing amounts into providing healthcare.
For investors, Healthcare is a highly attractive sector deserving of a core long-term position in many portfolios. The sector benefits from many attractive attributes, including strong growth, inelastic demand, and low sensitivity to the economic cycle. Combined, these factors have allowed the sector to post earnings growth and returns ahead of the broader equity markets over the long-term - a trend we expect will continue in the years ahead.
Building a healthy portfolio
The strong growth in the Healthcare sector has and continues to be mainly driven by two secular drivers. This includes a growing and aging global population (demographics), as well as a continuous stream of innovations:
Demographic tailwinds will persist for many decades to come – As an increasing share of world’s population ages, the demand for healthcare services will inevitably grow and, by extension, companies in the Healthcare sector will likely benefit from the greater demand. With demographics over the next few decades essentially all but written in stone, these tailwinds to the sector can be confidently viewed as durable and sustainable.
Innovation has been a huge driver of sector outperformance – Innovation continues to expand what is possible in the field of healthcare, allowing us with time to treat, and provide better outcomes, for an increasing array of conditions over time. Moreover, given the high unmet need across a range of diseases, there remains plenty of runway for companies to continue to innovate in the decades ahead. Looking forward, one promising indicator that suggests innovation will continue to remain strong has been ever growing spending on research and development (R&D) by the Healthcare sector. By simply looking at the companies that make up the S&P 500 Healthcare Index, you can see this relentless growth.
When we put it all together – secular tailwinds from demographics & innovation and sticky demand for healthcare that is resilient to the ups and downs of the economy - healthcare has been one of a few sectors which has exhibited above average earnings growth, but with less earnings volatility than the broader equity market.
Now, if there was only an investment solution to help take advantage of these trends…
An ETF with broad Healthcare exposure
At TD Asset Management Inc. we are committed to providing one of the broadest offerings of investment solutions in Canada and the essential building blocks needed to help you construct a well-thought-out portfolio. The TD Global Healthcare Leaders Index ETF (TDOC) provides investors with broad based global exposure to Healthcare, in order to capitalize on the secular trends driving growth in the sector - without the risk of investing in a narrow niche or industry group. TDOC provides exposure to nearly 130 mid, large and mega-cap names, capturing both mature industry leaders and healthcare innovators. This includes Pharmaceuticals, Biotechnology, Life Science Tools, Healthcare Equipment, Healthcare Services, and Health Technology.
What separates TDOC from the rest?
Not all ETFs are created equal. One unique aspect of TDOC is that it caps the weight of individual securities at 2% and excess weight is redistributed to other index components on a pro-rata basis at each rebalancing interval. This tilts exposure away from slower growing mega-cap pharmaceutical companies, with the weight redistributed to faster growing biotechnology, health equipment, life science tools, and healthcare technology.
TDOC is designed to help meet the evolving needs of investors and includes strategies that we believe are truly distinctive in the marketplace. Our offering provides greater choice and opportunity for investors in the fast-growing Canadian ETF market.
For more information about TDOC and to view our entire ETF line-up, visit us at td.com/etfs and download the TD ETFs Product Brochure.
The information contained herein has been provided by TD Asset Management Inc. and is for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance.
Commissions, management fees and expenses all may be associated with investments in exchange-traded funds (ETFs). Please read the prospectus and ETF Facts before investing. ETFs are not guaranteed, their values change frequently, and past performance may not be repeated. ETF units are bought and sold at market price on a stock exchange and brokerage commissions will reduce returns.
The TD Global Healthcare Leaders Index ETF ("TD ETF") is not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the Solactive Global Healthcare Leaders Index (CA NTR) ("Index") and/or any trade mark(s) associated with the Index or the price of the Index at any time or in any other respect. The Index is calculated and published by Solactive AG. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards TDAM, Solactive AG has no obligation to point out errors in the Index to third parties including but not limited to investors and/or financial intermediaries of the TD ETF. Neither publication of the Index by Solactive AG nor the licensing of the Index or any trade mark(s) associated with the Index for the purpose of use in connection with the TD ETF constitutes a recommendation by Solactive AG to invest capital in said TD ETF nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in this TD ETF.
Certain statements in this document may contain forward-looking statements (“FLS”) that are predictive in nature and may include words such as “expects”, “anticipates”, “intends”, “believes”, “estimates” and similar forward-looking expressions or negative versions thereof. FLS are based on current expectations and projections about future general economic, political and relevant market factors, such as interest and foreign exchange rates, equity and capital markets, the general business environment, assuming no changes to tax or other laws or government regulation or catastrophic events. Expectations and projections about future events are inherently subject to risks and uncertainties, which may be unforeseeable. Such expectations and projections may be incorrect in the future. FLS are not guarantees of future performance. Actual events could differ materially from those expressed or implied in any FLS. A number of important factors including those factors set out above can contribute to these digressions. You should avoid placing any reliance on FLS.
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