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Quarter-End Insights

Healthcare Moves Into Undervalued Territory After Pullback

Fears of a progressive president and changes to the healthcare system have faded.

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Morningstar's US Healthcare Index has decreased 3% over the trailing 12 months amid global concerns regarding the coronavirus. However, the returns have outperformed the broader equity market's 6% decline. We believe concerns about a global recession due to the coronavirus disruption are weighing on returns, but the defensive nature of healthcare is supporting returns on a relative basis. While taking a back seat to the coronavirus, the fears of a major healthcare policy change in the U.S. have faded, with the more moderate Joe Biden likely to win the Democratic nomination for president.

Healthcare sector index vs market index. - source: Morningstar

Damien Conover does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.