Using HTEC as an example for the category, we see the burgeoning upside momentum in this part of the market. HTEC, which tracks a VettaFi index, has crossed above its 50- and 200-day moving averages in August. It is now retesting its 2025 highs with gains of nearly 25% since the market\u2019s April 8 lows.\u00a0<\/p>\n
These returns still represent a lag to the S&P 500\u2019s 29% returns in the same period, but they also represent notable outperformance relative to the broader healthcare sector \u2014 as measured by the Health Care Select Sector SPDR Fund (XLV) \u2014 which is up only 3% since April.\u00a0<\/p>\n
Health tech is having its best relative year to healthcare since 2020, even though it remains a valuation-play based on historical data.<\/p>\n
![\"Returns](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/09\/Returns-and-Calendar-Returns-1.png\")
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Source: VettaFi PRO<\/p>\n
Valuation, Deal Making & Innovation<\/p>\n
\u201cHTEC itself is trading at the very bottom of its historic EV\/sales ratio,\u201d Silva said. \u201cWe see this as a temporary anomaly caused by short-term concerns that are likely to correct over time, especially given the inelastic demand for healthcare and ongoing demographic changes.\u201d\u00a0<\/p>\n
Compelling valuation is only one supportive factor in a trifecta of potential drivers of future returns in health tech. There\u2019s also accelerating innovation and M&A activity.\u00a0<\/p>\n
As Silva highlights, things like genomics \u2014 \u201cwe\u2019re now able to test for cancer in a blood draw,\u201d he said \u2014 and robotics, where \u201c60% of all knee surgeries in the US are done by robots today,\u201d are all rapid growth areas. There\u2019s also the burgeoning path of AI-driven drug discovery.\u00a0<\/p>\n
\u201cDrug discovery is the No. 1 expense for biotechs. Any improvement here would be massive [for companies],\u201d Silva explained. \u201cThere\u2019s an estimated $236 billion in revenues from 190 drugs at risk by 2030 with patents expiring. That will likely spur even more deals and make sure that the segment keeps investing heavily in R&D.\u201d\u00a0<\/p>\n
\u201cIt seems the market hasn\u2019t fully priced in the value of this organic and inorganic growth,\u201d he added.\u00a0<\/p>\n
Under the Hood\u00a0<\/p>\n
HTEC and XLV only have about a third of the portfolios in common. It\u2019s a similar story with HEAL and FMED. These funds look beyond healthcare sector companies and invest in some technology, consumer staples, even financial names as well \u2014 companies that are disrupting healthcare today.\u00a0\u00a0<\/p>\n
A look at HTEC\u2019s top 10 holdings includes biopharmaceutical companies developing new therapies, surgical solution innovators, medical researchers, and biotechnology names.\u00a0\u00a0<\/p>\n
![\"Holdings](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/09\/Holdings-as-of-Sept-8-2025.png\")
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Source: ROBO Global<\/p>\n
On Sale<\/p>\n
Healthcare investors know too well that the sector is volatile even if it\u2019s seen as defensive. But whether searching for capital growth or for diversification in the face of a top-heavy, near-record-highs market, it could be that healthcare \u2014 and more specifically, segments like health tech \u2014 offer a compelling opportunity.\u00a0<\/p>\n
If nothing else, from a valuation perspective, the entire sector is cheap, and health tech seems to have the wind at its back.\u00a0<\/p>\n
\u201cThe macroeconomic headwinds that have been pressuring the sector, like high-interest rates and inflation, are now starting to ease. At the same time, the fundamental demand for healthcare remains strong,\u201d Silva said. \u201cIt looks like a sector with strong long-term growth prospects that is currently on sale.\u201d\u00a0<\/p>\n
![\"\"\/](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/09\/newsletter-first.jpg\")
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