Healthcare Sector Attracts Hedge Fund Investors
The healthcare sector is sparking interest among hedge fund investors. In the first quarter, the number of investors that included this sector in their searches nearly doubled from the previous quarter. From January through March, 81 investors sought hedge funds focused on health care; by comparison, 45 investors were attracted to the sector in the fourth quarter of 2009.
Investors are evaluating the healthcare sector for several reasons. Some like the fact that the subsectors, which include pharmaceuticals, biotechnology, medical technology, and healthcare services, provide a wide range of opportunities for skillful hedge fund managers.
Others note that not only has the healthcare sector been uncorrelated to the broader equity market but—as a U.S. wealth advisory firm points out—its subsectors tend to be uncorrelated to one another as well. Investors can take advantage of the sector by identifying opportunities in various subsectors.
Still other investors see the potential for healthy returns. Most hedge funds go long and short when investing in the healthcare sector, which enables them to make money on both rising and falling stock prices. A U.S. family office finds this attractive since it is looking to achieve at least a 15 percent return.
Health care is a sector that offers a wide range of opportunities, tends to be uncorrelated, and has the potential for good returns. And that, according to the investors the BHA has spoken with, is very appealing.