Want More Exposure to Healthcare Stocks? Look to the Innovators

Written by: Efram Slen, Manager, Nasdaq Global Information Services

It’s a fact: we’re living longer. According to the National Institute on Aging , “the 85-and-over population is projected to increase 351% between 2010 and 2050.” That’s not a typo! And while there are certainly numerous factors that have led to the change, advancements in healthcare have been key.

Largely fueled by biotech —a merging of medicine and technology—the rate of change and innovation in healthcare is nothing short of stunning. As the industry strives to meet the mounting healthcare needs of older Baby Boomers, innovation is only expected to accelerate.

The products that are in development today are fascinating.


Surgical knives are transforming cancer treatment by laser-focusing high dose radiation to treat otherwise inoperable tumors—with no invasive surgery, no anesthesia, and no post-treatment downtime. RNA chemistries are being used to treat intractable diseases by silencing the genes that cause them. Smartphone apps are in the works that alert caregivers in the case of unusual physical activity or locations that may indicate a crisis. Another app helps emergency medical personnel more easily diagnose concussions on the spot for school-age athletes. The innovations seem endless, as do the opportunities for growth.

For investors, industry innovation often provides opportunity. When it comes to today’s healthcare innovators, they offer a few additional advantages.

  • As a whole, healthcare innovators (especially biotech firms) are largely uncorrelated to the market.
  • As science evolves at lightning speed, so do their products. This dynamic accelerates the development lifecycle to quickly generate new revenue streams.
  • Healthcare innovators are bolstered by an aging population that is willing to pay a high price to stay healthy and happy as long as possible.
  • Of course, the largest opportunity exists when investing in companies that have yet to reach their potential. These “non-earners” are on the precipice of growth, five to ten steps away from coming into their own as market leaders. In the summer of 1996, a little company called Starbucks was trading for $1.50 a share (it hit a high of $62.61 last October). The following summer, newly formed Amazon was trading for $1.50 a share (it jumped over $770 earlier this month). Sure, these are every investor’s dream, but one key to the old adage of “buying low and selling high” is getting in at the “ground floor”—before prices have had a chance to catch up with revenue potential.

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    To leverage this opportunity, Nasdaq has created the Nasdaq US Health Care Innovators Index , the index behind the Principal Healthcare Innovators Index ETF (symbol: BTEC). True to its name, the index is focused on companies that are true innovators and offer new products and technologies that have potential for significant growth. Unlike more established players (Amgen and Pfizer, for instance) that are already in the portfolios of many investors, these stocks deliver a new level of exposure to this typically uncorrelated sector, as well as the opportunity to invest at a time when the companies’ stock prices don’t yet reflect their potential value. Even better, investing in these innovators may be the ideal way to take advantage of the latest in healthcare—even if you’re still young and healthy enough to put off using them for your own medical care for another 30 to 40 years.

    To learn more, please visit our website or contact us .


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