Following the recent election, financial and energy sectors have experienced a notable surge, eclipsing other investment avenues that may offer substantial returns. The “Trump trade” has captured investor attention, primarily focused on financial and energy stocks. The S&P 500 financial sector rose nearly 8% in the past week alone, while energy stocks increased by approximately 5%. While these impressive gains are noteworthy, they prompt a critical examination of broader market dynamics and the potential for untapped sectors.
Jeremiah Buckley, a portfolio manager at Janus Henderson, argues that investors might be overlooking the health-care sector, which has only seen a modest increase of around 2% over the same period. Buckley suggests that, despite its current standing as one of the weaker performers within the S&P 500, health care may experience a renaissance under the upcoming administration’s policies. This perspective is underlined by the notion that the sector has suffered in recent years from stringent regulations, particularly concerning pharmaceuticals and government programs like Medicare and Medicaid.
A shift in the regulatory environment could set a more favorable stage for health-care businesses, allowing them to thrive. Buckley emphasizes that the Trump administration may introduce policies less restrictive than those witnessed in the past four years, which could catalyze growth within the sector. Such changes may lead to improved profitability and innovation, particularly among pharmaceutical companies developing groundbreaking treatments and therapies.
Innovation Driving the Sector
The health-care sector is on the cusp of a significant transformation, characterized by rapid innovation, especially in drug discovery and medical technologies. Buckley specifically highlights the advancements surrounding GLP-1 medications, which have proven essential in diabetes treatment and have driven considerable market appreciation for companies like Eli Lilly. Buckley’s assertion that the industry’s trajectory looks promising extends to oncology and various aspects of medical devices, suggesting a fertile ground for investment.
Portfolio Opportunities
Investors seeking to capitalize on these emerging trends should consider health-care companies with solid fundamentals and demonstrated potential for profit growth. Buckley manages substantial funds, including the U.S. Dividend Income Fund, where giants like UnitedHealth Group and AbbVie form significant portions of the portfolio. Similar themes recur in the Growth and Income Fund, underscoring the importance of incorporating robust health-care names into investment strategies.
While financial and energy stocks have garnered significant attention and enthusiasm following the election, the health-care sector remains an area ripe for exploration. Given the anticipated regulatory shifts and ongoing innovation, investors would be prudent to reevaluate their positions. The past performance of health-care stocks may not reflect their future potential. As the landscape evolves, informed decisions focusing on underappreciated sectors could yield substantial returns. Investors must be proactive in recognizing these trends to fully harness the market’s potential.