There has traditionally been a comforting certainty that healthcare companies provide ballast in a portfolio. It was long assumed that the combination of predictable revenues from pharmaceutical and medical technology companies would anchor the income side of things, while growth stocks did the heavy lifting in terms of long-term capital returns.
But while UK stalwarts AstraZeneca (AZN) and GSK (GSK) performed well last year in particular, for much of the past two years a sector that should be ballast has instead been dead weight. A combination of trade war uncertainty and tech shares’ dominance has increased the perception of healthcare companies as a potential value trap.
While investors piled into AI, semiconductor champions and anything with even a passing link to the Magnificent Seven, drugmakers, medtech groups and healthcare services quietly slid down the performance tables.