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Investing in Healthcare: Key Insights from DNB’s Health Care Fund Webinar
Fund Overview
DNB Fund Health Care is a long-only equity fund, benchmarked against the MSCI World Healthcare Index. It primarily invests in large, diversified healthcare companies globally, with a small allocation to mid-cap companies for growth opportunities.
Management Team
The fund is managed by a team of three experts:
- Rune Sand-Holm: 15 years in stocks and equity research.
- Benedicte Bakke: 12 years at DNB, with experience in large pharmaceutical and biotech companies.
- Anesa: Medical doctor and analyst.
Investment Strategy
The healthcare sector represents 12% of the global market cap, with pharma, biotech, and life sciences making up 8%, and equipment and services comprising 4%. The fund focuses on the US market (70%) and other Western developed countries, avoiding direct investments in China but gaining exposure through Western companies.
Why Healthcare?
Healthcare offers stable growth opportunities, driven by an aging population, lifestyle diseases, and innovation. Companies in this sector often have high operating margins (30%+), strong balance sheets, and high cash conversions, making them attractive investments.
Fund Performance
Historically, healthcare investments have provided higher returns with lower risk compared to the general market. The fund typically holds around 40 stocks, with the top ten accounting for about half the portfolio value. Key holdings include Novo Nordisk, Lonza, and Abbvie.
Challenges and Opportunities
Recent underperformance was due to weak biotech sentiment and struggles in the medtech segment. Key detractors included BioMarin, Dexcom, Edwards Lifesciences, and Humana. However, the team remains confident in the long-term potential of these investments.
Significant opportunities lie in obesity drugs and neurological diseases. Companies like Novo Nordisk and Eli Lilly lead the obesity drug market, estimated to be worth $100-$150 billion. The focus on neurological diseases, such as Alzheimer’s and major depressive disorders, also presents promising investment opportunities.
Conclusion
DNB’s Health Care Fund is well-positioned to capitalize on growth opportunities within the healthcare sector. Despite recent challenges, the fund managers are optimistic about the future, driven by a robust investment strategy and a deep understanding of the industry.
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