Sygnia Itrix Solactive Healthcare 150 ETF
Healthcare can be a potentially attractive equity investment given the defensiveness of the sector. This means that demand is relatively inelastic – demand does not respond strongly (and negatively) to price increases because healthcare as a service is a necessity, rather than a luxury.
The Sygnia Itrix Solactive Healthcare 150 ETF – which affords exposure to prominent Covid-19 vaccine providers such as Pfizer and Johnson & Johnson – provides low cost, passive exposure to global healthcare companies. It is heavily invested in developed markets (especially the US), where countries have higher use of medicines in chronic diseases, according to global healthcare analytics and clinical research services firm IQVIA.
One of the most burdensome diseases is cancer, which IQVIA estimates as having led to a 14.0% compounded annual growth rate in the use of medicine over the 2010-2019 period, according to its global medicines and usage trends report (2021). This same amount of medicine and drug usage surged 30.0% compounded annually in emerging markets. Accordingly, IQVIA expects spending on cancer-related therapies to increase by between 9.0% and 12.0% annually by 2026, bringing expenditure on related new treatments and medicines to $300bn. While the macroeconomic environment deteriorated since IQVIA first made the projections, we believe that the Sygnia Itrix Solactive Healthcare 150 ETF remains well positioned given the defensiveness of healthcare and the analysis above, which indicates sector growth above global real GDP growth which the IMF forecasts at 2.3% this year and 1.0% in 2023.
The Sygnia Itrix Solactive Healthcare 150 ETF aims to replicate the price and yield performance of the Solactive Developed Markets Healthcare 150 Index before fees and expenses. The index consists of the largest 150 companies from the healthcare industry based on the Solactive Global Benchmark Series. Constituents are selected and weighted based on free float market capitalisation method, which excludes non-tradeable shares.
Fund suitability
-
This ETF suits investors looking for thematic, passive exposure to healthcare companies. Thematic investing is beneficial as investors gain access to companies expected to be at the forefront of an emerging theme; however, this comes at the possible risk of investing in new, high-growth companies that might take longer than usual to become profitable. As a result, this ETF is best held over a long-term investment horizon in a portfolio, given its high-risk profile.
Fees
- The fund has a total investment cost of 0.50%.
Top holdings
-
UnitedHealth leads the top 10 holdings with 7.0% of assets. From a geographical perspective, the top three countries the ETF is invested in are the US (70.8%), followed by Switzerland (7.4%) and Japan (4.3%)
Sygnia Itrix Solactive Healthcare 150 ETF (JSE:SYGH)
New to investing and want to learn more about other ETFs?
Read: Top Fund Picks for December
Compare ETFs on EasyETFs
Background: Exchange-traded funds (ETFs)
Exchange-traded funds (ETFs) are passively managed investment funds that track the performance of a basket of pre-determined assets. They are traded the same way as shares and the main difference is that whereas one share gives exposure to one company, an ETF gives exposure to numerous companies in a single transaction. ETFs can be traded through your broker in the same way as shares, say, on the EasyEquities platform. In addition, they qualify for the tax-free savings account, where both capital and income gains accumulate tax free.
Benefits of ETFs
- Gain instant exposure to various underlying shares or bonds in one transaction
- They diversify risk because a single ETF holds various shares
- They are cost-effective
- They are liquid – it is usually easy to find a buyer or seller and they trade just like shares
- High transparency through daily published index constituents
Disclaimer
This research report was issued by Intellidex (Pty) Ltd. Intellidex aims to deliver impartial and objective assessments of securities, companies or other subjects. This document is issued for information purposes only and is not an offer to purchase or sell investments or related financial instruments. Individuals should undertake their own analysis and/or seek professional advice based on their specific needs before purchasing or selling investments. The information contained in this report is based on sources that Intellidex believes to be reliable, but Intellidex makes no representations or warranties regarding the completeness, accuracy or reliability of any information, facts, estimates, forecasts or opinions contained in this document. The information, opinions, estimates, assumptions, target prices and forecasts could change at any time without prior notice. Intellidex is under no obligation to inform any recipient of this document of any such changes. Intellidex, its directors, officers, staff, agents or associates shall have no liability for any loss or damage of any nature arising from the use of this document.
Remuneration
The opinions or recommendations contained in this report represent the true views of the analyst(s) responsible for preparing the report. The analyst’s remuneration is not affected by the opinions or recommendations contained in this report, although his/her remuneration may be affected by the overall quality of their research, feedback from clients and the financial performance of Intellidex (Pty) Ltd.
Intellidex staff may hold positions in financial instruments or derivatives thereof which are discussed in this document. Trades by staff are subject to Intellidex’s code of conduct which can be obtained by emailing mail@intellidex.coza.
Intellidex may also have, or be seeking to have, a consulting or other professional relationship with the companies mentioned in this report.