Biotechnology firms to draw investors post-pandemic
The healthcare sector has outperformed the broad equity market during the coronavirus crisis as investors reward companies with advanced research to address COVID-19 and could continue to invest in biotechnology firms after the pandemic ends, Janus Henderson’s portfolio manager Andy Acker said.
Although healthcare stocks tended to act more defensively during an economic contraction, in these circumstances, there was not a steady stream of surgeries or doctor’s visits that were expected to help prop up healthcare companies. On top of that social distancing and preparations for a surge of coronavirus patients sidelined many of these routine activities, he said.
However, investors continued to reward those companies which were using innovation to aggressively develop vaccines or treatments for COVID-19, while firms helping to facilitate remote medical care were also gaining favour.
“Investor focus on these trends has accelerated due to the crisis but could last long after the pandemic ends, in our view,” Acker stressed.
“Although we are sceptical of the rally in certain biotechnology companies making headlines as it relates to the virus, we believe investor focus on the sector’s advanced technology could last long after the pandemic ends.”
At the same time, investors acknowledged that tele-medicine services were taking off as both Government and insurers encouraged the technology’s use as an efficient and safe means to treat influenza and potential COVID-19 infections, easing the burden on the healthcare system.
Although the advances were encouraging, Acker warned that investors should keep perspective and stressed it was very likely that we would not have a vaccine for the general population for at least 12 to 18 months.
“We think investors should expect continued volatility in the coming months. However, we believe the rapid pullback of equity prices has created some compelling opportunities,” he said.
“Longer term, we feel that the sector’s unprecedented innovation addressing unmet medical needs will lead to attractive growth – a point we think is now being driven home by the global race for a coronavirus cure.”
Recommended for you
Platinum Asset Management has put its two closed-end funds under strategic review in a bid to reduce the share price discount to pre-tax NTA and maximise shareholder value.
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.