The iShares Global Healthcare ETF (ASX: IXJ) gives investors broad exposure to global healthcare, covering pharma, biotech, medical devices and even insurers, with major holdings like UnitedHealth Group Inc. (NYSE: UNH), Johnson & Johnson (NYSE: JNJ), and Eli Lilly and Co. (NYSE: LLY). For a cost of 0.41% this is an attractive ETF to buy into the long-term growth drivers such as ageing populations, rising healthcare demand and ongoing medical innovation, which have driven the sector higher in the past – in the past it’s been a “go too” sector.
It’s been a relatively tough period for the sector since President Trump was returned to office in November 2024. However, underperformance has been even more pronounced over the last year both home and abroad with global healthcare stocks falling ~18% in a rising market, largely courtesy of uncertainty around policy decisions out of the Whitehouse. Unfortunately the ASX sector has plunged more than 40% during the same timeframe, similar weakness but just on steroids!
The case for a healthcare recovery is slowly improving. Policy risk appears to be easing after a prolonged period of uncertainty, with outcomes shifting toward negotiation rather than aggressive regulation. At the same time, valuations are compelling, with the sector trading at a multi-decade discount to the broader market. We aren’t keen to “fight the tape” but we see increasing appeal in this “left behind” sector.
- We like the risk/reward towards the IXJ ETF calling it an accumulation as opposed to outright buy at this stage.
MM is cautiously bullish toward the IXJ ETF around $127
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