Chief Investment Officer
For information purposes only. The views and opinions expressed here are those of the author at the time of writing and can change; they may not represent the views of Premier Miton and should not be taken as statements of fact, nor should they be relied upon for making investment decisions.
If you have read the In Favour / Out of Favour and quarterly update notes for the Diversified fund range, you will be well versed in the investment team’s view that it is appropriate to be cautious in approach. That view has been reflected in the Premier Miton Diversified Sustainable Growth Fund, as with the others in the range, in two ways. Firstly, in asset allocation and secondly, within each asset class.
That has meant, for the Diversified Sustainable Growth Fund, that the equity exposure has been structured relatively defensively, which in turn has meant that we have had little exposure to the large US technology and communications companies (the FAANGs and related companies) which have performed very well. Many of these companies meet our ESG and sustainable criteria. Simply, we thought (and think even more now) that they are expensive
If you read the latest edition of In Favour / Out of Favour, you will find more detail there and action we have taken.
Healthcare; a global megatrend
There are key sustainable investment megatrends running through the Diversified Sustainable Growth Fund; healthcare is one of those.
Healthcare is a very broad industry area – it covers key areas such as: Pharmaceuticals, Biotechnology, Healthcare Providers and Services, as well as Medical Devices and Supplies each of which can be broken down into increasingly niche areas.
Each of these areas has varying degrees of direct impact on the end patient. For example, biotechnology focuses on developing products to treat a wide range of health issues from rare diseases to oncology. Healthcare providers and services includes health insurance providers, hospitals and facilities, as well as telemedicine companies. Medical devices and supplies are an area of significant innovation covering areas such as non-invasive surgery techniques and robotic assisted surgeries.
It is well documented that demographics and healthcare are inextricably linked. Aging populations and the prevalence of obesity globally are key long term fundamentals underpinning healthcare. While the good news is we are living longer on average and can make the most of our life for longer than earlier generations, the bad news is the growing population on our planet doesn’t always treat health as if it were a priority.
In the last twenty years, emerging economies have been boosted by globalisation and manufacturing shifting to Asia. The emergence of a sizeable, aspirational middle class has brought with it changes in lifestyle and an adoption of western consumption habits. People’s workdays are increasingly sedentary, entertainment has seen the same shift as an array of screens takes up hours of attention and easily accessible processed food can be provided on demand. All of which contribute to the rising prevalence of lifestyle diseases such as diabetes and high cholesterol which in turn cause an abundance of linked health issues.
The market for longevity and wellness innovation is bringing more capital into the industry and speeding innovations. Meanwhile, the market for more efficient treatments is likely to receive serious focus as demand on health systems increases, budgets tighten, and cost of care rises.
What is undeniable when looking at healthcare is the role that technology is having in the development and ongoing integration of the different areas of this key sector. Looking to the future we believe this innovation can and will build momentum.
What is exciting is that while the healthcare sector is still in the relatively early stages of accelerating technological integration, healthcare innovation means that the possibilities for ground-breaking improvements in the near future are staggering.