In a market filled with ups and downs, two ETFs have stood out by delivering consistent returns: the Amundi ETF MSCI Europe Healthcare UCITS ETF and the Canadian consumer staples iShares S & P/TSX Capped Consumer Index ETF.
These funds have defied market fluctuations, providing investors with positive returns every year from 2014 to 2023. Their steady performance has made them rare gems in the world of equity ETFs.
**The Health-Care Golden Child**
The Amundi ETF tracks the MSCI Europe Healthcare Index, heavily invested in pharmaceutical stocks. This sector has proven to be a defensive growth engine, driven by the steady demand for healthcare products.
Pfizer, AstraZeneca, and Novo Nordisk make up a significant portion of the index, contributing to its resilience. These companies benefit from patent protection and regulated drug markets, providing them with predictable earnings.
**Currency Fluctuations Boost Returns**
The Amundi ETF also benefited from currency fluctuations. While the MSCI Healthcare index has dipped into negative territory in recent years, the ETF’s returns remained positive due to the depreciation of the British pound.
This currency advantage has provided an extra cushion against market downturns, further enhancing the fund’s appeal to investors.
**Novo Nordisk’s Obesity Bet**
Novo Nordisk, a Danish pharmaceutical company, has been a major contributor to the ETF’s success. Its anti-obesity drug Wegovy has driven the company’s valuation to new heights.
The obesity treatment market is estimated to reach 0 billion annually, propelling Novo Nordisk’s stock. However, analysts caution that high expectations could lead to a valuation correction.
**Other Sector Considerations**
Despite Novo Nordisk’s strong performance, Kepler Cheuvreux believes the rest of the pharma sector remains fairly valued. The sector’s low volatility and defensive nature make it attractive in an economy facing high interest rates.
However, analysts note that the health-care sector tends to underperform in election years due to increased scrutiny. Nevertheless, they do not anticipate drug pricing to become a major election issue this year.
**Conclusion**
The Amundi ETF MSCI Europe Healthcare UCITS ETF and the iShares S & P/TSX Capped Consumer Index ETF have consistently outperformed the market, providing investors with much-needed stability.
Their focus on health care and consumer staples, combined with currency fluctuations and Novo Nordisk’s obesity success, has positioned these funds as long-term winners.
