April 2017 marks the ten-year anniversary of the Adamant Global Healthcare Index. With that date on the horizon, it is more than fitting that Bellevue Asset Management has launched a corresponding investment fund governed by Luxembourg law. The BB Adamant Healthcare Index (Lux) Fund was registered for public distribution in Germany, Austria, Switzerland and Luxembourg end of 2016.
The Adamant Global Healthcare Index was created in April 2007 to capture the attractive prospects that the global healthcare market offers to investors. The index is composed of the forty most attractive healthcare stocks in the global universe. It is reviewed every six months in April and October and adjusted if necessary. The success of the Adamant Healthcare Index led to the 2011 launch of a Swiss investment fund for institutional investors that replicates the index. This Swiss fund is now being followed by a Luxembourg-based fund that has been approved for sale to retail investors in Germany, Switzerland, Austria and Luxembourg.
All growth segments in one fund
With new drug approvals holding steady at high levels and a flurry of innovation coming from the medtech and services sub-sectors, the healthcare sector’s long-term growth potential is secure and investors can participate in that potential through this fund. For Dr. Cyrill Zimmermann, Head of Healthcare Funds & Mandates, this new fund represents another major step in the development of the firm´s range of healthcare investment products: “A growing number of investors had asked us to offer an index product outside Switzerland too. Those requests have now been met with the launch of the BB Adamant Healthcare Index (Lux) Fund. This is an important addition to our diverse range of sound investment solutions. The fund effectively covers all of the high growth segments within the promising healthcare industry on a global scale.”
The team continuously screens about 600 of the 3,000 listed companies in the healthcare sector based on 8 criteria. Four quantitative and four qualitative parameters are applied. The qualitative parameters measure the quality and track record of a company's management team, product pipeline and operating risks as well as country-related risks while the quantitative parameters provide information on stock valuations. There are four regions, Western Europe, North America, Japan/Australia and Emerging Markets, and the index is composed of the ten best stocks from each region.
The region with the highest overall score, usually North America, can have a maximum index weighting of 35% when the index is rebalanced, so this index puts more emphasis on emerging markets. Companies with high valuations and low growth rates are rarely in the index. Historical index data shows that mid-cap stocks have typically represented 60% to 80% of the index and the Asia region has accounted for about one-third of the index. Furthermore, conventional pharma stocks are clearly underweighted compared to their weighting on the MSCI World Health Care Index, the standard sector benchmark.