A healthy fight against volatility

The first quarter of 2020 has been challenging for investors. Impacts of the pandemic are being felt around the world and volatility has taken hold of the markets, with the S&P 500® Index down more than 30% year to date.1

As investors grapple with positioning their portfolios for the future, it may be helpful to review how healthcare has behaved during negative (bear market) and positive (bull market) quarters over the past 20 years.

Healthcare equities have protected to the downside during negative periods, falling roughly 4% on average, compared with a more than 7% decline for the S&P 500 Index.

20 years of bull and bear quarters

Performance period: December 31, 1999–December 31, 2019

Twenty years of bull and bear quarters bar chart

Source: Morningstar.

Past performance may not be a reliable guide to future performance and does not guarantee future results.

What this means for investors:

As investors become increasingly concerned about further market corrections, it may be a good time to consider more direct exposure to healthcare equities. We believe the asset class should continue to benefit from its defensive characteristics, powerful secular trends, and transformative technological breakthroughs.


1 As of March 24, 2020.

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IMPORTANT RISK CONSIDERATIONS

Investing involves risk, including the possible loss of principal.

Past performance does not guarantee future results.

Narrowly focused investments may exhibit higher volatility than investments in multiple industry sectors.

Healthcare companies are subject to extensive government regulation and their profitability can be affected by restrictions on government reimbursement for medical expenses, rising costs of medical products and services, pricing pressure, and malpractice or other litigation.

The views expressed represent the investment team’s assessment of the market environment as of March 2020, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Views are subject to change without notice.

All third-party marks cited are the property of their respective owners.

The Russell 3000 Healthcare Index measures the performance of all healthcare holdings included in the Russell 3000 Index, which represents the 3,000 largest US companies based on total market capitalization.

The S&P 500 Index measures the performance of 500 mostly large-cap stocks weighted by market value, and is often used to represent performance of the US stock market.

Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

Nothing presented should be construed as a recommendation to purchase or sell any security or follow any investment technique or strategy.

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