Health/ long term care

Just looking to set off some conversation about health and long term care as it’s an area I intend to do a bit of digging in. There are some pretty shocking stats regarding the increasing need for affordable (and luxury) long term care as baby boomers are reaching the latter part of their retirement. Personally I won’t be making any stock picks in this industry as I am not anywhere near qualified but will be looking into ETFs and funds that are. I guess my search will be going into which funds/ETFs invest in:

  1. care providers
  2. equipment (home improvements as well as for care homes)
  3. tech (e.g. AI diagnostics)
  4. health insurance (less and less policies have comprehensive cover for this)
  5. opportunities for riskier investments in emerging or developing markets with a similar problem

Not necessarily looking for answers just seeing if there are any other like minded investors here that have gone down this rabbit hole :rabbit2: :hole:

Why this topic you may ask? We will all be old one day and I hope I have the opportunity to have a great quality of life for as long as possible :man_white_haired:

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I haven’t done much research but came across the following ishares ETFs. I agree that there is an opportunity here.

https://www.ishares.com/ch/individual/en/themes/megatrends/demographics-and-social-change#impact

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Thanks! The ageing population AGED and healthcare innovations HEAL etfs are really interesting and right on the button. When I find any comparisons I’ll post anything on here to give people food for thought. I shall also start adding them to the freetrade requests of course.

I have bought one of the worldwide health shares which is an investment trust and the only health fund/trust/ETF on freetrade at the moment (happy to be proven wrong if I have missed one!) which I am happy with but I don’t feel like it’s hitting the sweet spot I’m looking for.

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It is definitely an interesting area. A third of children born in 2013 are expected to reach to age of 100. So we know: longer lives post-retirement (which need to be funded), higher care/health burdens at a time when NHS is under permanent pressure to change, to do more with less. So individuals need to save (invest!) money to pay for their future and their infirmity.

Care home businesses are often simultaneously terrifyingly expensive and financially precarious.
Terrifyingly expensive because it is very hard to understand how expensive care is - partly because getting old is a topic that’s quite think about and plan for. (To give a sense: one person in a high quality southern UK care home and with reasonably low care needs for a decade: ~0.5m.) Financially precarious because local councils are tightening funding, and some care home businesses over-extended themselves.

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Exactly, I feel like this problem is going to get really bad over the next 5-10 years, I expect there will be scandals and real social problems but I’m betting (and hoping) some companies will find the right solutions and monetise them. And as you say the volumes will be extremely high so should in theory turn into a gigantic part of an already huge industry.

Care homes isn’t something I would touch. I’ve worked in care and the funding in the U.K. is very precarious. Worldwide is different of course but still I’m not convinced that it’s a sound investment.

Health is something I’m planning to invest quite a bit into. All the reports say it’s a growth sector and the reasoning seems sound to me

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Agree, I think there are some bumpy roads ahead for this sector, for UK in particular. I guess having a 20-30 year investing horizon I am optimistic that investing broadly in both solutions and services will find some of the companies that figure out what the better outcomes are for those needing long term care. As a potential investor I am thinking that whilst it’s so bad it’s actually the best time to invest. I am definitely thinking globally too (I have just read that Asia has more over 65s than the whole population of the USA) so whatever small % of my portfolio I set aside for this it won’t be dominated by UK focused investments.

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Another aspect of this trend is the increasing use of lifetime mortgages / equity release to fund long-term care. Market leaders are Aviva, Legal & General, Just Group.

Disclaimer: I hold a long position in Just Group

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Speaking of..

one of the UK’s four biggest care homes, although they’re owned by private equity firm Terra Firma Capital Partners.

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I definitely see healthcare as a growing need that should also survive bear markets better as an “essential”. However I find I am often disappointed at how investing in it seems to focus on the US and the racket of Big Pharma and health insurance. I haven’t researched enough to hold a valid opinion on this but I’ve read plenty of commentators warning of legislative changes that could hit pharmaceutical profits by widening access to affordable healthcare. The moral undertones here put me off - kind of like tobacco companies celebrating a surge in young smokers in their updates.

For now I put most of my health allocation towards Scottish Mortgage whose second-largest holding after Amazon is Illumina - a gene sequencing biotech that recently backed Grail, a Silicon Valley startup that is looking to create pioneering innovations in early cancer detection.

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I’m hoping Primary Health Properties (PHP) will be available to invest on Freetrade.

Care Home companies may come and go but whoever takes over is still going to need buildings/properties.

Get more info or vote here if you’re interested.

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Not necessarily. The high costs mean they’re likely to be empty for periods between owners. A few care homes near me have closed down and are now lying empty and residents moved elsewhere

True, there could be void periods

However, I’m satisfied that PHP are suitably diversified so if a couple of their properties end up lying empty for a while, they will have others to continue to provide income.

Their portfolio comprises over 300 primary healthcare facilities and most are either owned by them freehold or long leasehold.

I think the wider point you and others are touching on here is the very real fact that there are (and will be a lot more) high profile failures/scandals/issues and legislation in this area. That said it seems to be universally agreed that it’s an industry that must exist and must grow in some form or other. For me that means no stock picking as nothing is certain on a company by company basis but if I can find and invest in a broad range of core health/care and non-core that support health/care in 10+ years there should be big money flowing through the industry (both basic low cost high volume care and high end care).

The big ‘if’ that I’m betting on is that someone figures out how to make it sustainable and make a fair margin on it.

Thanks for the food for thought guys keep it coming :blush:

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If you’re looking for healthcare exposure, surely you can hold ILMN directly instead?

Not available through Freetrade yet, although I would sooner rather a biotech ETF. Considering Crispr for the time being.

Thoughts on Woodford Patient Capital? Didn’t realise quite how much cutting-edge biotech is in there at a significant discount, albeit with years of investor disdain.

I bought them. They fell. Kept on falling. Bought more so it didn’t look so bad average wise

Tempted to do the same, although I’ve heard that the reverse is actually true most of the time. The theory is only a handful of stocks do really well and so one should keep adding to successful stocks (thus averaging down) rather than than fallers. I can certainly agree on the basis that I’ve not bought again when prices go up thinking they’ve peaked only to see them keep rising.

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It’s hard to take any positives from the phrase ‘doom loop’ so I think it’s time to bail for me