U.S. stock fund flows into and out of the healthcare sector have swung wildly from week to week lately, as investors have adjusted their bets over how long the economy will stay strong.
Many view healthcare as a defensive sector because it has constant demand and is somewhat insulated from the economy. Down nearly 2% for the year to date, healthcare has badly lagged the gain of over 17% in the S&P 500 index as U.S. economic growth has heated up to what the Atlanta Federal Reserve estimates is a booming 5.9% expansion in the third quarter.
In the latest week, investors pulled a net $1.4 billion from the sector, the biggest weekly outflow since May 2022. That was only a little more than the net inflow of $1.3 billion to healthcare stocks in the week of Aug. 14, the second-largest weekly gain since 2008, according to BofA Global Research.
Overall, the healthcare sector - which ranges from health insurers like UnitedHealth to pharmaceutical companies like Pfizer to small biotechs - has received the third largest inflows of any sector year to date, BofA's data showed. Still, the sector [.SPXHC] is down around 2% year-to-date, one of few areas that have not joined the broad market rally, adding to its appeal among bargain hunters.
"If you continue to see money flowing into healthcare then investors are using their feet to march to a more conservative posture given the uncertain outlook for where the economy goes from here," said Bob Kalman, senior portfolio manager at Miramar Capital.
While U.S. growth has largely been robust this year, some investors who are bullish healthcare stocks believe that the Federal Reserve's interest rate hikes will eventually start to weigh on the economy.
Healthcare "offers some defense in a period where the lagged impact of Fed tightening is likely to cause economic growth to contract," said Emily Roland, co-chief investment strategist at John Hancock Investment Management, who is bullish on the sector.
U.S. stock fund flows into and out of the healthcare sector have swung wildly from week to week lately, as investors have adjusted their bets over how long the economy will stay strong.
Many view healthcare as a defensive sector because it has constant demand and is somewhat insulated from the economy. Down nearly 2% for the year to date, healthcare has badly lagged the gain of over 17% in the S&P 500 index as U.S. economic growth has heated up to what the Atlanta Federal Reserve estimates is a booming 5.9% expansion in the third quarter.
In the latest week, investors pulled a net $1.4 billion from the sector, the biggest weekly outflow since May 2022. That was only a little more than the net inflow of $1.3 billion to healthcare stocks in the week of Aug. 14, the second-largest weekly gain since 2008, according to BofA Global Research.
Overall, the healthcare sector - which ranges from health insurers like UnitedHealth to pharmaceutical companies like Pfizer to small biotechs - has received the third largest inflows of any sector year to date, BofA's data showed. Still, the sector [.SPXHC] is down around 2% year-to-date, one of few areas that have not joined the broad market rally, adding to its appeal among bargain hunters.
"If you continue to see money flowing into healthcare then investors are using their feet to march to a more conservative posture given the uncertain outlook for where the economy goes from here," said Bob Kalman, senior portfolio manager at Miramar Capital.
While U.S. growth has largely been robust this year, some investors who are bullish healthcare stocks believe that the Federal Reserve's interest rate hikes will eventually start to weigh on the economy.
Healthcare "offers some defense in a period where the lagged impact of Fed tightening is likely to cause economic growth to contract," said Emily Roland, co-chief investment strategist at John Hancock Investment Management, who is bullish on the sector.
U.S. stock fund flows into and out of the healthcare sector have swung wildly from week to week lately, as investors have adjusted their bets over how long the economy will stay strong.
Many view healthcare as a defensive sector because it has constant demand and is somewhat insulated from the economy. Down nearly 2% for the year to date, healthcare has badly lagged the gain of over 17% in the S&P 500 index as U.S. economic growth has heated up to what the Atlanta Federal Reserve estimates is a booming 5.9% expansion in the third quarter.
In the latest week, investors pulled a net $1.4 billion from the sector, the biggest weekly outflow since May 2022. That was only a little more than the net inflow of $1.3 billion to healthcare stocks in the week of Aug. 14, the second-largest weekly gain since 2008, according to BofA Global Research.
Overall, the healthcare sector - which ranges from health insurers like UnitedHealth to pharmaceutical companies like Pfizer to small biotechs - has received the third largest inflows of any sector year to date, BofA's data showed. Still, the sector [.SPXHC] is down around 2% year-to-date, one of few areas that have not joined the broad market rally, adding to its appeal among bargain hunters.
"If you continue to see money flowing into healthcare then investors are using their feet to march to a more conservative posture given the uncertain outlook for where the economy goes from here," said Bob Kalman, senior portfolio manager at Miramar Capital.
While U.S. growth has largely been robust this year, some investors who are bullish healthcare stocks believe that the Federal Reserve's interest rate hikes will eventually start to weigh on the economy.
Healthcare "offers some defense in a period where the lagged impact of Fed tightening is likely to cause economic growth to contract," said Emily Roland, co-chief investment strategist at John Hancock Investment Management, who is bullish on the sector.
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