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Healthcare Sector Is Gonna Get Exciting, Capture That With CURE

December 8, 2020 10:18 am
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Healthcare Sector Is Gonna Get Exciting, Capture That With CURE

The healthcare sector is shaking off rust accrued earlier this year and with the 2020 election season mostly behind the group – pending next month's Georgia Senate runoff elections – market observers are growing increasingly bullish on the group heading into 2021.

What Happened

Of course, that's good news for the Direxion Daily Healthcare Bull 3X Shares (NYSE:CURE). CURE, which seeks to deliver triple the daily returns of the Health Care Select Sector Index, is higher by 5.50% over the past week, indicating the underlying sector is finishing 2020 on a strong note. The leveraged exchange traded fund's recent bullishness is being helped by an increasingly favorable policy environment.

“The full results of the U.S. elections are not yet set in stone, but with a likely Republican-controlled Senate and smaller Democrat majority in the House, we view dramatic changes in health policy as unlikely,” according to BlackRock research. “President-elect Biden will not have the votes to press for a more progressive agenda, and his key objective to expand Affordable Care Act coverage would likely face a similar fate. The incoming president’s position on drug pricing reform is also less severe than that of President Trump.”

Why It's Important

With pharmaceuticals being the Health Care Select Sector Index's largest industry weight and managed care and insurance providers representing a significant portion of that benchmark, CURE stands as an aggressive play on the suddenly sanguine political climate for the healthcare sector.

“Rather than any large-scale transformation of the healthcare system, we see potential for only incremental changes – those achievable through a combination of executive orders and Medicaid/Medicare authority,” notes BlackRock. “Add to this the immediate need to focus on pandemic response, and that leaves little political capital to take on complex health policy changes, particularly as hospitals confront COVID-19 challenges and vaccine development and dissemination remain a priority.”

What's Next

Making CURE all the more alluring is that the healthcare sector has both growth and value traits, a compelling, unique combination in this environment. The growth avenue is sourced via healthcare innovation, something CURE has some exposure to.

“The coronavirus crisis also accelerated innovation in healthcare services, particularly in telemedicine and in-home care,” notes BlackRock. “A six-fold increase in the use of telemedicine services in the first half of 2020 is just the start of what we see as an enduring trend. Hospitals and physicians are increasingly investing in telehealth capabilities, and consumers are warming to this model of care. We see ample room for further adoption after what had been a slow start prior to the pandemic.”


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