Thanks to the convergence of science and technology, and our growing understanding of disease biology, society is a step nearer to transforming human health and healthcare systems. 

For those looking for healthcare investment opportunities, Syfe’s Healthcare Innovation portfolio strikes a balance across five healthcare subsectors: genomics, biotechnology, pharmaceuticals, healthcare services, and medical devices. 

By investing across the full spectrum of healthcare stocks, the Healthcare Innovation portfolio aims to be diverse enough to deliver better risk-adjusted returns over the long-term. Such diversification is recommended because not all companies will successfully turn their scientific discoveries into commercially viable businesses. 

Moreover, investing in healthcare requires a long-term view. It can take many years of research and clinical trials for companies to successfully bring a drug or treatment to market. On average, only one in 10 drugs tested on humans are approved for use. The risk involved in picking the correct companies to invest in, and at the right time, is considerable. 

Rather than crack your head over identifying the next Moderna or Amgen, a portfolio like Syfe Healthcare Innovation provides convenience as well as diversified exposure to multiple innovations across healthcare verticals. 

How we built the Healthcare Innovation portfolio 

Portfolio allocation within the Healthcare Innovation portfolio, as of November 6 2024.

To build the Healthcare Innovation portfolio, our investment team screened potential exchange-traded funds (ETFs) based on our rigorous selection criteria, choosing six that provided broad exposure to healthcare investment opportunities. The team is also constantly monitoring new healthcare themes for possible inclusion. 

Read more about our portfolio construction methodology here.

Our selection methodology includes looking at liquidity and size. For example, our chosen ETFs have at least $500 million in assets under management (AUM) because larger funds tend to have better liquidity and track record. Our ETFs are also managed by well-established fund managers such as BlackRockand State Street Global Advisors.

Here’s a closer look at our underlying portfolio holdings.

Genomics: ARKG

The iShares Genomics Immunology and Healthcare ETF (IDNA)gives investors the opportunity to be at the forefront of genomics and healthcare. Companies within IDNA are working on technologies such as CRISPR gene editing, targeted therapeutics, stem cells, and agricultural biology.

The top holdings of IDNA include Exelixis, Revolution Medicines, Gilead Sciences, Incyte, and Beigene. 

Top 10 holdings, IDNA, as of 8 November 2024

Exelixis focuses on novel therapies for difficult-to-treat cancers, with its flagship drug approved for several cancer types. The company is continually expanding its oncology pipeline, exploring new drug combinations and indications. Revolution Medicines specializes in precision oncology, developing targeted therapies aimed at some of the toughest cancers. 

Another notable company is Regeneron’s COVID-19 antibody cocktail, which has recently been authorised by the US FDA for additional use. The drug can be used to treat patients who are mildly sick but are at risk of severe illness. According to Singapore’s National Centre for Infectious Diseases, Regeneron’s drug will likely be used in Singapore too once it is available.

Biotechnology and medical technology: IBB and HEAL

The iShares Biotechnology ETF (IBB) holds 214 biotechnology companies listed in the US and is widely used to add exposure to the biotech sector. As of 8 November 2024, the fund’s net assets totaled $7 billion, reflecting not just the popularity of the ETF but also keen investor interest in the biotech space.

The top three holdings of IBB are Gilead Sciences, Vertex Pharmaceuticals, and Amgen.

Gilead Sciences is a biopharmaceutical company that manufactures the antiviral drug remdesivir. It was created to treat Ebola and has been described by the World Health Organization as one of the most promising therapies against COVID-19.

Vertex Pharmaceuticals is a biotechnology company primarily known for its groundbreaking treatments for cystic fibrosis (CF). Beyond CF, Vertex is expanding its research to other serious conditions. The company is currently advancing gene-editing treatments in collaboration with CRISPR Therapeutics for diseases like sickle cell disease.

Amgen is one of the world’s largest independent biotech companies. 

iShares Healthcare Innovation UCITS ETF (HEAL) provides global exposure to companies that are at the forefront of medical robotics, digital health, and telemedicine. The inclusion of HEAL in our portfolio expands your exposure to the rapidly evolving healthcare industry and taps into the growth opportunities presented by these innovative trends. The top holdings in HEAL include Argenx, Gilead Sciences, and UCB. 

Argenx is headquartered in Belgium, specialising in immunology, particularly the development of human antibodies. The company is focused on creating treatments for various autoimmune diseases. 

UCB is a global biopharmaceutical company with a focus on neurology and immunology. Its most recognized work includes the treatment of rheumatoid arthritis and Crohn’s disease. The company is also advancing in the field of neurology, particularly in Parkinson’s disease and epilepsy.

Top 10 holdings, HEAL, as of 8 November, 2024

Pharmaceuticals and healthcare services: IHF and XLV

The Health Care Select Sector SPDR Fund (XLV) is one of the most popular ETFs for broad exposure to the healthcare sector in the US. It holds 62 large cap companies across diverse  sub-sectors like pharmaceuticals, medical devices, health care providers and services, biotechnology, and other forms of healthcare technology.

Because of this diversification, XLV holds the largest weighting (17.6%) within our Healthcare Innovation portfolio.

XLV has significant exposure to pharmaceuticals and medical device makers. Its top three holdings are Eli Lilly & Co,  UnitedHealth Group, and Johnson & Johnson (J&J).

Top 10 holdings, XLV, 7 November 2024

Eli Lilly and Co is a global pharmaceutical leader known for its innovative therapies, particularly in diabetes, oncology, immunology, and neuroscience. The company’s growth is further supported by its strong pipeline and recent acquisitions, positioning the company to address some of the most complex health challenges worldwide.

UnitedHealth Group is the largest US health insurance provider. UnitedHealth offers health insurance plans for individuals, employers, and government programs like Medicare and Medicaid.

Most people may know J&J as the company behind iconic brands such as Johnson’s, Listerine and Neutrogena, but J&J is also a leading manufacturer of medical devices and pharmaceutical products, such as its single-dose COVID-19 vaccine.

While XLV offers broad healthcare exposure, the iShares U.S. Healthcare Providers ETF (IHF) is another popular ETF that focuses on a more narrow range of healthcare companies, namely those in health insurance, diagnostics and specialised treatment. IHF holds 66 healthcare stocks. Top holdings include UnitedHealth Group, Elevance Health, Cigna, Veeva Systems and CVS Health. Elevance Health and Cigna are leading health insurance companies in the United States. CVS Health owns a retail pharmacy chain as well as a health insurance provider, Aetna.

Medical devices: IHI and XHE

The iShares U.S. Medical Devices ETF (IHI) and SPDR Health Care Equipment ETF (XHE) are two popular medical devices ETFs that we have added to the Healthcare Innovation portfolio with similar allocations.

IHI holds 48 medical device companies and is a market cap-weighted ETF. For instance, Abbott Laboratories has a market cap of $200 billion and makes up the largest allocation within IHI at 16.7%. 

XHE holds 64 companies, of which 78% are healthcare equipment makers and 22% are manufacturers of healthcare supplies. XHE is an equal-weight ETF. Equal-weight funds often tilt towards smaller stocks and hold roughly the same allocation for each stock.

Consequently, both IHI and XHE have very different top holdings. Abbott Laboratories, Intuitive Surgical, Stryker, Boston Scientific, and GE Healthcare Technologies are the top five holdings of IHI and make up nearly 50% of the fund.

Top 10 holdings of IHI, as of 8 November 2024

For XHE, the top five holdings are Alphatec, Integra Lifesciences, Masimo, Atricure, and Penumbra.. These stocks account for about 7.5% of XHE’s total holdings. 

Top 10 holdings of XHE, as of 7 November 2024

With both IHI and XHE in the Healthcare Innovation portfolio, you get broad industry exposure to large, mid and small cap stocks in the medical devices space. 

Investing in the future of healthcare

Healthcare innovation has spurred the development of many new medicines and therapies in areas from oncology to gene therapy.

If you are keen to invest in forward-thinking companies that have the potential to transform human health, Syfe’s Healthcare Innovation portfolio is one way to capitalise on this megatrend. With six ETFs providing diversified exposure to genomics, biotechnology, pharmaceuticals, medical devices and more, the portfolio is a way to invest in future healthcare leaders and current top performers alike. 

There is no minimum investment, no lock-in period and no brokerage fees. As an added advantage, Syfe will manage your portfolio with free dividend reinvestment and automatic rebalancing, for fees as low as 0.35% per year.