Performance of disruptive technology funds

Anthony Ginsberg, managing director at GinsGlobal Index Funds, explains a big advantage of such technologies is their ability to reduce healthcare costs by, for example, lowering recovery periods in hospitals.

“Governments and industry are under pressure because of the rising costs, and the US healthcare premiums, essentially, have almost doubled in the US in the last decade,” he says.

Innovative investment themes which play on megatrends are increasing.

UK asset manager Schroders recently unveiled the Global Transformation Range of funds which will seek out long-term opportunities, including, next to healthcare innovation, themes such as urbanisation, climate change, disruption and energy transition.

Healthcare innovation is also a theme in MSCI’s recently launched disruptive technologies index.

HANetf, an independent provider of UCITS exchange traded funds (ETFs), together with Gins Global Investment Management, developed the HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL).

The ETF tracks the Indxx Advanced Life Sciences & Smart Healthcare Thematic Index, which measures the performance of listed companies involved in the advanced life sciences and smart healthcare sector.

The dollar-denominated fund, which was launched in April 2019, has 101 holdings.

The themes in the sub sectors are heavily weighted to medical devices, making up 45%, followed by biological engineering with 28%, neuroscience (11%), robotics (4%), genome sequencing (4%), healthcare trackers (2%) and others. Regionally, it has a focus on the US with 69%.

Benseddik alerts however that there is no certainty of disruptive technology funds to outperform their peers.

“Uncertainty about potential applications, capital intensity and societal acceptability influence return on investment cycles. Here as elsewhere, it is necessary to be attentive to speculative bubbles,” he notes.

Daniel Koller, head investment management at BB Biotech, a Swiss investment company, says: “Getting in early when an investment opportunity starts taking off with massive upside potential is every investor‘s dream, but often that also exposes investors to unexpectedly high risk.

“In the health industry, gene therapies seem to be up and coming, but many of these approaches are in early clinical development and will take years to reach the market, if they even get that far.”

This is an excerpt from an article on Expert Investor. Click here for the full article.