Long-term investors should look beyond stock market volatility
Market volatility can be unsettling, but history shows that prices have returned to less volatile patterns over time. That can be good news for long-term investors.
While technological advancement within health care may seem innocuous at first, it can have life changing applications. Companies able to capitalize on the growing need for quality and innovative treatments stand to benefit. And the demand for such therapies is increasing as the population base ages. For example, the aging population (60+) is expected to more than double by 2050.1 These trends bode well for companies able to capitalize on the growing demand.
Zachary Shafran and Bradley Warden, portfolio managers of Ivy Science and Technology Fund, believe technological advancements in health care are creating investment opportunities.
Below are 3 examples of stocks we believe may benefit from rapid evolution of innovation and technology within the health care sector.
Gilead Sciences, Inc. (GILD)
GILD is a healthcare name the Fund has been watching for a long time. The company has a core pharmaceutical franchise in HIV and hepatitis treatment, but we believe the company lacked a new engine for growth and innovation. With the recent acquisition of Kite Pharma, Inc., we believe Gilead has the potential to establish a new platform for cancer treatments based on genetic engineering.
The Fund previously held Kite Pharma, Inc. so we have high conviction in the new technology and research and development capabilities Kite's innovative technology brings to Gilead. As time progresses, we believe the market will recognize the potential growth from this new platform and assign a higher multiple to Gilead’s stock price.
Vertex Pharmaceuticals, Inc. (VRTX)
VRTX engages in discovering, developing and manufacturing small molecule drugs for patients with serious diseases in specialty markets. The company focuses on therapies for the treatment of cystic fibrosis and other early-stage development programs.
We believe the company’s revolutionary cystic fibrosis treatment, shown to significantly improve patient lung function, will enable the firm to maintain its dominate market share. As a result, we believe this will be beneficial to the company’s top and bottom-line going forward.
IONIS Pharmaceuticals, Inc. (IONS)
The firm was formerly known as Isis Pharmaceuticals, Inc. and changed its name to Ionis Pharmaceuticals, Inc. in December 2015. IONS was founded in 1989 and is headquartered in Carlsbad, California. The company seeks to create innovative medicines to save patients’ lives.
We think the prospects for this biotechnology holding continue to be bright. The company maintains a broad pipeline of drugs to treat a wide variety of diseases, and in our view, the company’s patents provide strong and extensive protection for its innovative drugs and technology. When a company is able to create novel, new therapies with significant positive outcomes, we believe people will pay for them.
1Source: United Nations.
Past performance is not a guarantee of future results. The opinions expressed are those of the Fund’s portfolio managers and are not meant as investment advice or to predict or project the future performance of any investment product. The opinions are current through June 30, 2018, are subject to change based on market conditions or other factors, and no forecasts can be guaranteed. The holdings discussed are for illustrative purposes only and are not intended as a recommendation to purchase, sell, or hold any specific security or to engage in any investment strategy.
GILD: 0.9%, VRTX: 4.4%, IONS 2.2% of net assets as of 06/30/2018.
Risk factors: The value of the Fund’s shares will change, and you could lose money on your investment. Because the Fund invests more than 25% of its total assets in the science and technology industry, the Fund’s performance may be more susceptible to a single economic, regulatory or technological occurrence than a fund that does not concentrate its investments in this industry. Securities of companies within specific industries or sectors of the economy may periodically perform differently than the overall market. In addition, the Fund’s performance may be more volatile than an investment in a portfolio of broad market securities and may underperform the market as a whole, due to the relatively limited number of issuers of science and technology related securities. Investment risks associated with investing in science and technology securities, in addition to other risks, include: operating in rapidly changing fields, abrupt or erratic market movements, limited product lines, markets or financial resources, management that is dependent on a limited number of people, short product cycles, aggressive pricing of products and services, new market entrants and obsolescence of existing technology. These and other risks are more fully described in the Fund’s prospectus. Not all funds or fund classes may be offered at all broker/dealers.