Global X recently announced the launch of the Global X Telemedicine & Digital Health ETF (EDOC - Free Report) , broadening the issuer’s portfolio of thematic ETFs. The launch of the fund is timely as the year 2020 has been all about the coronavirus outbreak.
The overall number of global coronavirus cases has increased to about 19 million, while deaths have risen to more than 700,000, according to Worldometers. The trend is showing no sign of deceleration. This makes it clear that the coronavirus threat will be rife in the second half of 2020 (read: 3 New Coronavirus-Themed ETFs to Hog Attention in 2H).
The social distancing trend across the globe brought about some investing themes in recent months. These areas are work and learn from home, research on coronavirus treatments and vaccines, and telemedicine. We already have seen the launches of Direxion Work From Home ETF (WFH - Free Report) , ETFMG Treatments Testing and Advancements ETF (GERM - Free Report) , Pacer Biothreat Strategy ETF (VIRS - Free Report) and Global X Education ETF (EDUT - Free Report) and the latest addition in the COVID-theme is digital health ETF EDOC (read: Inside the New Education ETF Launched by Global X).
The fund seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Telemedicine & Digital Health Index. This includes companies involved in Telemedicine, Health Care Analytics, Connected Health Care Devices, and Administrative Digitization.
As far as geographical segmentation is concerned, the United States takes about 82.35% of the fund. China (4.07%), Hong Kong (4.05%) and Japan (3.97%) take next three spots in the fund. Health Care Technology (42.96%), Health Care Services (15.5%), Health Care Equipment (15.37%) and Lifesciences Tools & Services (12.59%) are the top four geographical segments. The fund holds 40 stocks in it and charges 68 bps in fees.
How Does It Fit in a Portfolio?
Telemedicine and Digital Health has received considerable prominence throughout the ongoing COVID-19 pandemic. With a significant chunk of the global population under stay-at-home orders, technology-based tools that enable remote communication with doctors and allow patient monitoring have become popular.
There is an upheaval in the global physical health care industry. “Sub-optimal patient outcomes, rapidly rising costs, inefficient systems, and limited access” have paved the way for digital health and telemedicine. Even if there is no pandemic, the industry should thrive as increased life expectancy means that the older population will have greater health care needs and can access treatment digitally with ease. The easier accessibility of Internet connections is also making the space a winner.
Global X noted that the digital health market would witness a CAGR of 24.7% from $216 billion in 2020 to $657 billion in 2025. Moreover, Doctors Without Borders can also help people in some emerging or frontier economies where healthcare system is still not that upgraded.
Moreover, Global X research points out that Telemedicine lowers healthcare costs. In the United States, health insurance provider Anthem reduced its co-pay for telehealth visits to $5, while the charge for in-person primary-care visits is $25-$35.
Against this upbeat backdrop, we think the new fund EDOC should see success ahead and amass a considerable asset base.
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