Fund Also Booms with Healthcare Craze

[Image source=Yonhap News]

[Asia Economy Reporter Eunmo Koo] Interest in bio and healthcare (health management) stocks, which has increased due to the impact of the novel coronavirus infection (COVID-19), is expanding into the fund market. This is because the development of vaccines and treatments is essential to overcome the COVID-19 crisis, and people’s interest in health management is expected to continue growing even in the post-COVID era.

According to FnGuide, a fund evaluation company, as of the previous day, the recent three-month average return of 26 domestic healthcare funds with assets under management of over 1 billion KRW (totaling 724.6 billion KRW) was 15.30%. This is the second-highest return among 43 types of thematic funds during this period, following commodity funds. The surge in stocks related to treatments, vaccines, and diagnostic kits amid the global spread of COVID-19 has been reflected in the fund market as well.

Excluding exchange-traded funds (ETFs), the Mirae Asset Korea Healthcare Fund showed the best performance with a 27.53% return. This fund mainly invests in domestic medical and healthcare-related stocks, with Samsung Biologics, Celltrion Healthcare, and Yuhan Corporation as its major portfolio holdings. The Mirae Asset Pension Korea Healthcare Fund (27.47%) and the DB Bio Healthcare Fund, which has the largest assets under management at 121.5 billion KRW (13.06%), also achieved double-digit returns.

Funds investing in overseas healthcare companies also performed well. The Mirae Asset Pension Global Healthcare Fund, which invests in Teladoc Health and WuXi Biologics, recorded a 12.08% return, and the Meritz Global Healthcare Fund, which holds Coherus Biosciences and HCA Healthcare, posted an 11.53% return, both exceeding 10%. Additionally, the BlackRock World Health Science Fund, which saw the largest increase in assets under management with an inflow of 18.5 billion KRW over the past three months, achieved an 8.75% return.

As major countries and pharmaceutical companies race to develop COVID-19 treatments and vaccines, there is growing optimism in the stock market that despite some investment risks in the healthcare market, various opportunities for high returns may be created, which is also influencing the fund market. Donghyuk Shin, head of overseas stock strategy at Hanwha Asset Management, explained, "Phenomena such as the sharp rise in Moderna’s stock price due to market demand for vaccines and fierce competition in vaccine development are likely to continue in the future."

This pandemic is expected to increase interest in health even in the post-COVID era, serving as a continuous growth driver for the healthcare market. Gahye Hong, a researcher at Daishin Securities, said, "The COVID-19 crisis has increased demand for healthcare products, including health functional foods and over-the-counter medicines," and added, "The spread of non-face-to-face interactions and the activation of online consumption will enhance consumers’ accessibility to healthcare products, promoting market growth."

This content was produced with the assistance of AI translation services.