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Post by chang on Feb 24, 2021 9:31:28 GMT
I think it might be this perception that's behind the market sector swings. There's reason for greater optimism that the global economy will pull out of this mess. So, cyclicals are doing better, while expensive, overbought sectors like technology, HC, and Asia are correcting. Do you consider HC to be an "overbought" sector? It's been struggling for a year, which frankly surprises me. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
NOTE: This series of health-care posts moved from the "Danger" thread to a new thread to allow focused discussion on health care sector performance.
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Post by Norbert on Feb 24, 2021 12:32:38 GMT
I think it might be this perception that's behind the market sector swings. There's reason for greater optimism that the global economy will pull out of this mess. So, cyclicals are doing better, while expensive, overbought sectors like technology, HC, and Asia are correcting. Do you consider HC to be an "overbought" sector? It's been struggling for a year, which frankly surprises me. I posted without thinking and have no reason to state that HC is "overbought". It was down hard yesterday. I can't explain it. Perhaps something political?
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Post by anitya on Feb 24, 2021 17:52:50 GMT
Do you consider HC to be an "overbought" sector? It's been struggling for a year, which frankly surprises me. I posted without thinking and have no reason to state that HC is "overbought". It was down hard yesterday. I can't explain it. Perhaps something political? I finally settled on an explanation that HC is split into traditional HC and life sciences / biotech - similar to traditional car companies and EVs. Not a perfect analogy but the best I could come up. A lot of HC OEFs own both. The traditional HC have become bond proxies, paying good amount of dividends - could be a reason why BRK is switching to traditional HC from banks. They are another type of consumer staples, with greater risk of extinction? The devices industry of HC is more like tech - hardware, automation, etc. I think we need to disaggregate to see clearly what is going on. A discussion on this merits a new thread. Pre-Covid, I had 10% in dedicated HC. Now much smaller because it has not kept up and shrinking on its own without my interference.
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Post by Deleted on Feb 24, 2021 20:13:28 GMT
primecap has been heavy into hc. they have been doing better recently after 2 years of underperformance
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Post by chang on Feb 25, 2021 2:09:17 GMT
I posted without thinking and have no reason to state that HC is "overbought". It was down hard yesterday. I can't explain it. Perhaps something political? I finally settled on an explanation that HC is split into traditional HC and life sciences / biotech - similar to traditional car companies and EVs. Not a perfect analogy but the best I could come up. A lot of HC OEFs own both. The traditional HC have become bond proxies, paying good amount of dividends - could be a reason why BRK is switching to traditional HC from banks. They are another type of consumer staples, with greater risk of extinction? The devices industry of HC is more like tech - hardware, automation, etc. I think we need to disaggregate to see clearly what is going on. A discussion on this merits a new thread. Pre-Covid, I had 10% in dedicated HC. Now much smaller because it has not kept up and shrinking on its own without my interference. Traditional "HC" funds are comprised of multiple and disparate sectors, that's true. See for example the sector breakdown for FSPHX: Sub-Industry Diversification ~~~~~~~~~~~~~~~~~~~~~~~~~ Biotechnology 24.27% Health Care Equipment 20.25% Managed Health Care 18.10% Pharmaceuticals 18.03% Health Care Services 8.04% Life Sciences Tools & Services 6.93% Health Care Technology 1.51% Health Care Facilities 1.36% Application Software 0.65% Research & Consulting Services 0.29% Other Diversified Financial Services 0.08% Investment Banking & Brokerage 0.02%But I am frankly puzzled why all of these sectors has not done better. I know biotech has surged, because I happen separately to own XBI. But given that the human race was almost wiped out by a pandemic, I would have expected all HC sectors to have done better over the last 12 months, including pharmas, HC equipment, technology, hospitals, etc.
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Post by Deleted on Feb 25, 2021 4:50:06 GMT
Are elective medical, dental procedure and primary care visits down due to covid? Not sure how much that contributes in addition to the regular insurance premiums.
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Post by Mustang on Feb 25, 2021 11:50:35 GMT
I can't speak for the industry but around here in the spring they pretty much closed the hospitals to everything except COVID patients. Everything except emergency procedures were postponed. New York was being hit hard at the time and the expectation was that it was coming west.
That didn't happen, at least not to the extent predicted. Hospital hallways were empty. Nurses and doctors were laid off.
All of that had to impacted the profitability of the companies.
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Post by chang on Mar 1, 2021 9:07:40 GMT
I moved the above posts from the "Danger" thread to a new thread, to keep it focused on the narrow topic here. I've made the same comment a few times during the last 3-4 months. While HC (funds) include a fairly wide variety of subsectors, I would think almost all of them would be doing well with so much attention focused on HC. Yet HC funds, while up over 3 mths and longer periods, haven't done as well as other sectors. For instance, VHT is up 29.9% for the last 1yr while SPY is up 30.8% -- close, but surprising given the elephant in the room. (VGT is up 52.9% for 1yr).
I have cash sitting in the IRA where I hold FSPHX, so I'd be happy to hear others' thoughts about this to help me decide whether this fund/sector is a buy, a hold or a sell.
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Post by Norbert on Mar 1, 2021 12:58:10 GMT
I think that Mustang is right. People are avoiding hospitals and delaying medical and dental treatment because of Covid-19.
I fell in the Alps late 2019 and slowly figured out that a tendon in my left hand/wrist is torn. But have taken no action.
This suggests that there's room to the upside. Unless something political happens to put price controls on medical care.
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Post by retiredat48 on Mar 1, 2021 16:42:28 GMT
Some negatives to always keep in mind re healthcare:
--waffle and mustang are correct...the elective surgery etc cutbacks due covid were real, and slow to return.
--The "progressive" agenda in the long run is to have single-payer, gvt run healthcare--no profits. I personally love capitalism but do not like it for healthcare--making money off the backs of sick people is not a model I get excited about. I'm OK with profits for med devices.
--Many companies like biotech place making money secondary. They would rather spend all profits on developing the next cures, such as curing cancer. Great for society; not great for stockholders. Notice the dividend yield of bio tech companies is close to nil. They might never pay out earnings.
--healthcare business model currently is almost broken...with such high prices/low payers. Need changes.
My recent investing in this space is with Cathy Wood in ARKG, Genomic Revolution ETF. However, I am not optimistic because it seems you find a gem fund, and millions of others find it also, and plow in, buying shares. Billions and billions in-flow to ARK Funds. Not good. Even the reddit gang is onto Woods.
Also accumulating IHI, Medical Devices etf. As boomers go into late seventies to eighties, growth should be huge in devices...think Medtronics/pacemakers. BTW I just beat covid start time, and did elective pacemaker surgery year ago January--working excellent.
Edit to add: Also been accumulating (Pyrup) since Nov election, MJ, marijuana companies etf--for medical purposes only!!
R48
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Post by chang on Mar 2, 2021 2:04:10 GMT
Thanks all - I hadn't really thought about the elective procedures aspect to Covid (not just surgery but any trip to the hospital or clinic, I suppose, from chiropractic treatments to colonoscopies). But those will surely come back. retiredat48 : regarding Biotechs, sure they reinvest all profits and pay no dividends, but that doesn't mean "not great for stockholders". My XBI has tripled in the few years I've owned it. (PS. I agree with you on IHI. I bought FSMEX a few years ago. Recall we had a discussion on M* about why I chose the more expensive Fido Select Fund in this particular instance, even though I like ETFs for sector exposure.)
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Post by retiredat48 on Mar 2, 2021 3:36:56 GMT
Thanks all retiredat48 : regarding Biotechs, sure they reinvest all profits and pay no dividends, but that doesn't mean "not great for stockholders". My XBI has tripled in the few years I've owned it. (PS. I agree with you on IHI. I bought FSMEX a few years ago. Recall we had a discussion on M* about why I chose the more expensive Fido Select Fund in this particular instance, even though I like ETFs for sector exposure.) Yes indeed...great rises in stock prices. But look back in historical charts, and see great falls in price as well. Biotech would go up 4X, fall 3X. I submit the reason is a lack of any dividend under-girding many of these companies. Thus the price declines are large in bear markets. My strategy is to sell some, or a lot, rather than ride a price decline downward. Use of 200 day Moving Averages a key here. I do not have this strategy for most of my funds--I will usually hold during bear markets, defined as down 20%, and weather out the storms. R48
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Post by chang on Apr 7, 2021 0:45:07 GMT
Observation: FSMEX (Med Equipment) is doing better than FSPHX (Diversified HC). Biotechs of course have been doing well. The surprise for me is that pharmas have not exploded.
(disclosure: I own FSPHX, XBI and FSMEX in that order of holding size.)
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Post by anitya on Apr 7, 2021 6:39:10 GMT
Observation: FSMEX (Med Equipment) is doing better than FSPHX (Diversified HC). Biotechs of course have been doing well. The surprise for me is that pharmas have not exploded. (disclosure: I own FSPHX, XBI and FSMEX in that order of holding size.) While I own FSPHX, I do not understand its level of ordinary income distribution. If I add the OI distribution to its expense ratio, the portfolio still does not earn 1% dividend yield, per M* distribution info for 2019 and prior years. For a portfolio that is not hyper growth like a biotech fund, it should have a better dividend distribution. May be the non-stated expenses are too high. Let me know if you figure it out.
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Post by johntaylor on Apr 18, 2021 13:39:18 GMT
YTD, am up 3 percent on health sciences and just holding for now
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Post by chang on Apr 18, 2021 14:02:41 GMT
YTD, am up 3 percent on health sciences and just holding for now YTD: FSPHX is up 2.6%, FSMEX up 5.1% and XBI down 6.5% (but up 52% over the last year). So YTD I am probably about flat in my HC investments. Which continues to puzzle me.
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Post by rhythmmethod on Apr 18, 2021 15:49:28 GMT
I've never done better than a C+ with dedicated HC. That probably says more about my ability than the sector. However, I'd rather give $$ to managers who have a history of holding HC and let them make the decisions. Good luck with it!!
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Post by chang on Apr 18, 2021 22:16:54 GMT
I've never done better than a C+ with dedicated HC. That probably says more about my ability than the sector. However, I'd rather give $$ to managers who have a history of holding HC and let them make the decisions. Good luck with it!! Do you mean HC funds, or diversified (non-sector) funds which have historically embraced HC (e.g., Primecap)? That makes sense, leaving it to professionals with proven track records to pick the sectors and holdings. However, I have occasionally succeeded with sector- or single country/region funds, which is why I don't eschew them altogether.
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Post by anitya on Apr 18, 2021 23:27:40 GMT
1/3rd my HC holding is in VHT, which returned 6-7% YTD. I bought these when I did not know much about OEFs. As a long term hold, it is not as good as well managed OEFs but for a taxable account, it has been a good vehicle for the sector bet.
If older and weak immune folks pass sooner, then their otherwise potential consumption of overall healthcare has to be taken out of the equation. This is not to mention all the other discretionary healthcare consumption that gets delayed or permanently forgone. The longer the consumption is delayed (i.e., the pandemic lasts), new products and technologies could replace current products and technologies by the time healthcare consumption returns.
In any case, I am slowly liquidating my sector bets and transferring the $$$ to broad market funds, in an effort to make my portfolio as boring as possible. May be one day I will source all my equity exposure from three or four equity ETFs.
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Post by rhythmmethod on Apr 18, 2021 23:29:36 GMT
I've never done better than a C+ with dedicated HC. That probably says more about my ability than the sector. However, I'd rather give $$ to managers who have a history of holding HC and let them make the decisions. Good luck with it!! Do you mean HC funds, or diversified (non-sector) funds which have historically embraced HC (e.g., Primecap)? That makes sense, leaving it to professionals with proven track records to pick the sectors and holdings. However, I have occasionally succeeded with sector- or single country/region funds, which is why I don't eschew them altogether. Yes, as referenced in bold above. I use those rather than dedicated HC. This is due to 1. My lack of success in timing HC specific and 2. My desire to hold fewer funds. Just a personal choice certainly not recommendation. Take care, man!
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Post by retiredat48 on Apr 19, 2021 2:25:32 GMT
I have owned/accumulated VGHCX, Vanguard's Healthcare sector fund, since inception (decades).
Occasionally I sell some for RMDs, if I considered the Fund was on a tear. Successful sells so far, but basically a buy and hold core fund.
FWIW ditto for FSPTX Fido's Tech Stock Fund, owned since inception.
And a longstanding major holding in FSEAX, Southeast Asia.
I have not added to these funds in many, many years. The NAV growth alone is like making major periodic additions to these core holdings.
I had a similar holding in Vanguard's Energy Fund since inception, but taken down to near zero in late 2019, and finally to zero shares in Feb 2020.
I am not that overly optimistic about Healthcare going forward (long story why), but it should surely have relative "growth" in business/usage for at least the next decade. It is currently staying in my core holdings.
R48
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Post by chang on Apr 19, 2021 6:39:17 GMT
HERE is a simple chart of VOO (S&P500) vs. VHT (HC). Observations over recent periods: - 18 years (from mid-2003 inception of VHT) ..... HC well ahead
- 10 years ..................................................... HC well ahead
- 5 years ....................................................... S&P500 ahead
- 3 years ....................................................... S&P500 slightly ahead
- 1 year ........................................................ S&P500 well ahead
One way to look at this is that HC is lagging over the last 1-5 years. I'm keeping my HC positions, but not adding at this stage. The deviations from the total market return are not gigantic. Over ten years, VHT ended up 15% higher than VOO, for an average annual difference of 1.5%* in VHT's favor. Based on this, I think rhythmmethod is probably the smartest guy in the room by ignoring it. * (1.15)^(1/9) = 1.01565
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Post by anovice on Apr 19, 2021 9:49:40 GMT
I have owned/accumulated VGHCX, Vanguard's Healthcare sector fund, since inception (decades). Occasionally I sell some for RMDs, if I considered the Fund was on a tear. Successful sells so far, but basically a buy and hold core fund. FWIW ditto for FSPTX Fido's Tech Stock Fund, owned since inception. And a longstanding major holding in FSEAX, Southeast Asia. I have not added to these funds in many, many years. The NAV growth alone is like making major periodic additions to these core holdings. I had a similar holding in Vanguard's Energy Fund since inception, but taken down to near zero in late 2019, and finally to zero shares in Feb 2020. I am not that overly optimistic about Healthcare going forward (long story why), but it should surely have relative "growth" in business/usage for at least the next decade. It is currently staying in my core holdings. R48 I have owned/accumulated VGHCX, Vanguard's Healthcare sector fund, since inception (decades). VGHCX certainly has been a disappointment, starting not too long after Jean Hynes took over from Ed Owens. And, it has significantly underperformed VHT for some years now. To compound matters, if one owns VGHCX in a taxable account it has produced even more pain with its tax inefficiency over the past three, five, and ten years. I owned VGHAX it in a retirement account and finally sold it in early 2020 and put the proceeds in Primecap Management funds that I own which have a sizeable allocation to the health care sector.
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Post by rhythmmethod on Apr 19, 2021 11:12:04 GMT
I'm keeping my HC positions, but not adding at this stage. The deviations from the total market return are not gigantic. Over ten years, VHT ended up 15% higher than VOO, for an average annual difference of 1.5%* in VHT's favor. Based on this, I think rhythmmethod is probably the smartest guy in the room by ignoring it. * (1.15)^(1/9) = 1.01565 That’s a first. But more and more, if an investment doesn’t move the ball in a way I can see it, I’ll leave it alone.
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Post by retiredat48 on Apr 19, 2021 14:55:44 GMT
I have owned/accumulated VGHCX, Vanguard's Healthcare sector fund, since inception (decades). Occasionally I sell some for RMDs, if I considered the Fund was on a tear. Successful sells so far, but basically a buy and hold core fund. FWIW ditto for FSPTX Fido's Tech Stock Fund, owned since inception. And a longstanding major holding in FSEAX, Southeast Asia. I have not added to these funds in many, many years. The NAV growth alone is like making major periodic additions to these core holdings. I had a similar holding in Vanguard's Energy Fund since inception, but taken down to near zero in late 2019, and finally to zero shares in Feb 2020. I am not that overly optimistic about Healthcare going forward (long story why), but it should surely have relative "growth" in business/usage for at least the next decade. It is currently staying in my core holdings. R48 I have owned/accumulated VGHCX, Vanguard's Healthcare sector fund, since inception (decades). VGHCX certainly has been a disappointment, starting not too long after Jean Hynes took over from Ed Owens. And, it has significantly underperformed VHT for some years now. To compound matters, if one owns VGHCX in a taxable account it has produced even more pain with its tax inefficiency over the past three, five, and ten years. I owned VGHAX it in a retirement account and finally sold it in early 2020 and put the proceeds in Primecap Management funds that I own which have a sizeable allocation to the health care sector. I have no qualms with what you post. I have VGHCX in an IRA. I don't doubt that one can likely find funds in all types of sectors and spaces that may do better than mine. However, for me, I have cutback activities in search for the top performing fund. Bored with it, perhaps. Any small total return improvements will simply go to my kids, or charities. So time spent not worth the effort...to me. But do note findings of past academic studies of this question: Which adds more to total return...asset allocation, or fund selection?? Far and away being in the right asset allocation and investment spaces contributed more to total return. In some studies, up to 90% of return was due to asset allocation. So I spend most of my investment time on asset allocation. Good day... R48
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Post by anovice on Apr 19, 2021 19:10:43 GMT
Which adds more to total return...asset allocation, or fund selection?? Far and away being in the right asset allocation and investment spaces contributed more to total return. In some studies, up to 90% of return was due to asset allocation. So I spend most of my investment time on asset allocation. We agree.
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Post by anitya on Apr 21, 2021 20:10:13 GMT
Is HTEC a competition for IHI?
HTEC tracked FSMEX from inception until about a year ago and then it took off. Anybody off hand knows what changed HTEC vs FSMEX about a year ago?
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Post by cactusjack on Apr 23, 2021 16:57:32 GMT
One of my larger holdings is THQ. First bought in 2016, and have added annually ever since. It has been a solid performer (all buys are in the green) and has a good dividend (5.9% currently). It fills my health care allocation quite nicely. Most of the cap gain has come in the last 6 months, but the dividend has kept the total return up. Probably the steadiest closed end fund I have.
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Post by chang on May 25, 2021 3:45:58 GMT
HC still puffing and wheezing, trying to keep up with the broader market. FSHPX somewhat unusually lagging its index over the last 12 months. Maybe because its growthier than most HC funds; compare FSHPX versus VHT portfolios. I hold this in an IRA and have some cash in core to deploy. A buy? drhelen are you around?
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Post by anitya on May 25, 2021 7:37:41 GMT
HC still puffing and wheezing, trying to keep up with the broader market. FSHPX somewhat unusually lagging its index over the last 12 months. Maybe because its growthier than most HC funds; compare FSHPX versus VHT portfolios. I hold this in an IRA and have some cash in core to deploy. A buy? drhelen are you around? Thanks for reminding to check HC. At some point, HC in my portfolio was a 15% overallocation through sector funds. I stopped making additional buys in it and as the portfolio grew, HC in my portfolio is now ~6 overweight compared to S&P 500. I am going to leave HC alone and not put more money into it. VHT is 1/3rd, PRHSX is 1/3rd, and Fidelity funds FSHPX, FMEDX, FSEMX are the remaining 1/3rd. I just checked and it turned out PRHSX YTD total return is 2.38% - every bond fund I own earned more than that. MTUM is reconstituting this month and I think they plan to take down HC weighting to low single digits from its current weighting which is the same as that of SPY. There was chatter about this on CNBC on 5/24.
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