Are Healthcare Investments Recession-Proof?
In both good and bad economic times, people will inevitably get sick and require health care. So when markets are down, health care may be a good defensive play for institutional investors.
“Including wars, depressions [and] recessions, health-care spending keeps increasing,” says Sam Ifergan, founder and chief executive officer of iGan Partners, a venture capital and private equity firm.
Indeed, despite the financial crisis, U.S. health-care spending reached $2.3 trillion in 2008, which represented a 4.4 per cent growth from the previous year. While this was a historical low compared to the previous 48 years, it was still positive.
Generally speaking, the health-care sector has performed well because it has strong underlying fundamentals, says Ifergan, noting that an aging population and a growing global emerging middle class are driving demand. “The fundamentals of health care seem to be leaning towards human beings spending more and more as a percentage of GDP towards health care because it’s a very important part of their lives, obviously.”