Brooke ThackrayHealth Care Select Sector SPDR FundXLVTOP PICKMay 03, 2024

Healthcare was one of her calls for 2026 but didn't rise until early August. Is up 15.3% this year. HC remains a buy for 2026.

Healthcare is not a value trap. It's the worst performing sector this year--and could get worse--but the knife has fallen. If you're looking for something to buy in a market with high valuations and possible headlines from inflation prints, look at healthcare. Healthcare is insulated from interest rate volatility. If you're worried about Trump's attitude to phama, then look at healthcare equipment and services and buy IHI.

He's overweight healthcare and within that is overweight biotech and pharma. There's a reversion to the mean after a brutal election year, but that's always the case. Relief comes when presidential policies are not as dire as expected. These stock have tremendous valuations and pay good dividends and there's growth with aging demographics.

(Note the short timeframe.)  A defensive pick at the time. Sector did well until September, then started to break down. He sold. When the market's running hot, healthcare doesn't take off. Not now in a seasonally strong period.

Making RSI new lows versus the market. Avoid this whole neighbourhood for a while.

A basket of names, with some winners and some losers. LLY is the top holding, that's a winner. Also holds JNJ and PFE, which haven't done particularly well. 

He owns NVO, MCK and CAH. He likes those companies where the only serious competition comes from 1 or 2 others, as they can control pricing power. Diabetes and weight loss are definite growth areas. See his Top Picks.

Energy, tech and healthcare will likely lead sales growth in the second half of 2024.

Second-half 2024 comps in earnings are compelling.

Likes healthcare in general, a larger weight for him. Healthcare has been the leader YTD, only 11 days into the new year. The XLV would make sense for a broad-based, US healthcare strategy. IXJ is the global version of that.

Bought this to be defensive, however, health care wasn't that defensive this year. Now, HC is past seasonality and he doesn't like it.

The recent inflows into healthcare are based on the new diet drugs like Ozempic. Novo Nordisk and Eli Lilly have benefitted from this trend. These diet drugs are the AI equivalent in healthcare, are blockbusters. 

Parts of healthcare are doing very well: equipment, disposables, more surgical procedures, managed care. Does this translate into stronger earnings and growth even during an economic contraction?

She picked it to start the year, but it hasn't performed well in the first six months. Healthcare has lagged this year, but when the VIX is this low, you want to hold defence.

She hopes healthcare picks up in the second half. She feels we're in late cycle where staples and utilities are expensive, but healthcare performs the best among these. HC has underperformed in the first half, but should improve second half or 2024, because XLV holds so many good companies.