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I'm gonna focus on the healthcare sector here, which to me is one of the most compelling areas that you would like to be invested in right now. When you think about it, healthcare touches all of our lives.
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If you're young, if you're old, it doesn't really matter. So it could just be a routine doctor visit. We're looking at cutting-edge treatment these days, or maybe it's the latest medical gadget.
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This is a space that's only growing more and more important. Now, personally, I've got just over 10% of my portfolio in the healthcare sector.
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What makes this space so interesting for investors, especially those of us who are over the age of 40, it blends stability, but also it has very strong growth potential.
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We have aging populations, we have increasing healthcare spending, and we have this constant innovation, and these are all driving the sector forward in ways that you really shouldn't be ignoring.
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Before I get into the details of my thesis, though, I would like to take a moment to thank Harvest ETFs for their support in preparing this video, and a little bit later in the video, I will be chatting with Paul McDonald.
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He's the CIO at Harvest Portfolios Group, and we're gonna be talking about some of these trends, and he's got some fascinating insights to share, especially when it comes to how Canadians can tap into the much larger global healthcare market.
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So stay tuned for that. Um, it is a great conversation. First, though, I wanna share my personal thoughts on why I think that healthcare is offering such an important and attractive investment opportunity right now.
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Let's start with the most obvious reason, aging populations. It's no secret that as we get older, our healthcare needs ramp up.
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Probably anybody who's 40 or 45 or older will be able to nod their heads and say, "I agree with that."
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Now, here in Canada, and this is a trend that we see globally as well, um, healthcare spending is increasing, and it increases dramatically, um, as you get older.
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To me, the important thing here, this isn't just a short-term thing, it's a long-term growth engine. It's not going anywhere anytime soon.
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Now, when I get to my interview with Paul, he really emphasizes here just how powerful the demographic shift is to the healthcare sector, so keep an ear out for that.
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He's also gonna talk about how our domestic healthcare system is tiny because of this global exposure is key, and he's gonna talk about how Harvest Healthcare Leaders Income Fund approaches this challenge.
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The fund is almost 10 years old now. It has never missed a distribution, and I know that is a concern for a lot of investors.
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Now, from that investor perspective here, this is one of my favorite parts of healthcare, is that it is constantly innovating, and I'm talking about things like robotic-assisted surgeries, the breakthrough we've seen recently in obesity drugs.
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This sector is just full of game-changing advancements. Robotic surgeries, they're doubling in market size, and of course, the weight loss drugs, they are just reshaping the entire industry.
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Another thing that sticks out to me here about the healthcare industry is its diversity. You've got pharmaceuticals, you've got biotech, you have medical devices, um, even healthcare services.
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They all come under one roof. So it's kinda like an investment buffet. You can pick and choose based on what aligns with your strategy.
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Another benefit to this is, of course, that diversity helps spread out risk while you're, uh, giving yourself exposure to these multiple growth drivers.
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Now, I need to talk just for a moment specifically about Canada here.
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This is something that a lot of Canadians don't realize, but our stock market here is severely underweight in the healthcare, especially when you compare it to the US.
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Healthcare makes up less than half a percent of the TSX, but it's over 10% of the global markets, and that is a massive gap.
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So if you're investing in Canada alone, then you're missing out on some of the biggest players, most of the biggest players in the entire healthcare world.
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Now, I wanted to shift to something a little bit more personal here for a moment. For those of us, as I mentioned, who are 40 years or older, healthcare checks so many boxes.
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Um, I think of, uh, the stability it offers, I think of the solid dividend yields typically you're gonna find here, and the resilience that this sector sees when the markets do turn down.
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So whether you're- if you're planning for retirement, whether you're just looking for reliable long-term growth, this is a sector that can deliver on multiple fronts.
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So that's kind of an overview of my take on the healthcare sector. I do wanna shift gears here for just a moment and go into my conversation with Paul.
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So in the discussion today, we're gonna be exploring why, as I mentioned, global exposure is so critical for Canadian investors.
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We're also gonna talk about the innovations that are transforming the industry and how this fund has maintained such an impressive track record. So here is my discussion with Paul. Hi, Paul.
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Thanks so much for joining me. I really wanted to bring you in on this discussion 'cause you...
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You know, this is what you do on a day-to-day basis, so, uh, your perspective on this will be very, very valued to our viewers, I'm sure. Uh, how are you doing today? I'm great. Thanks for having me back.
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Hey, really, really nice to see you again. So yeah, let's get right into it. I, I have a number of questions for you.
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Uh, first question I have are what are the advantages to the global healthcare portfolio when you're looking at it from a Canadian perspective? Anything that you can identify or share with our viewers? Yeah.
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I think the first thing we have to kinda do is, is just take a step back because, uh, you know, in Canada, the healthcare sector is less than half percent of the S&P TSX, and it's, you know, anywhere from 11 to 15% on the global market.
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And so we really aren't familiar within the Canadian markets of what healthcare investing actually looks like. Mm. So I would take a step back and kinda say, you know, the healthcare sector itself, it's, it's vast.
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It's very diverse. The f- the first thing people think about are, are drug manufacturers and biopharmaceuticals. Yes, that's a very key component, but there's multiple sub-sectors within healthcare.
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So when we think about things like medical devices, tools and equipment, the, the laboratory equipment, uh, and diagnostic, diagnostic equipment, and companies like Managed Care, for example, which are really the administrators of healthcare in the United States, as well as the ones that are orchestrating all the drug formularies and, um, uh, really integrated with, uh, the governments as they're the ones that administer Medicare and Medicaid, as well as commercial plans.
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So, uh-When we think about healthcare from a Canadian perspective, it's a massive sector.
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It has permanent non-cyclical tailwinds, you know, aging populations, technological innovation, and developing markets all really form, you know, a really positive outlook for the sector over the medium term.
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But from a Canadian's perspective, as I said, we really don't have the scale or the, um, or the diversity within our market.
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And a great example, um, is even within our Healthcare Leaders, which is 20 stocks, you know, those 20 stocks, the total market capitalization is, you know, one and a half times plus the entire S&P TSX.
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So, you know, it's a fabulous- Mm-hmm... sector with long-term growth dynamics, uh, but we do have to be looking outside of Canada for this. That's a lot of depth and insight there. Thank you for that.
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And it kind of takes my mind back to I don't know how many years, six, seven years ago, when I think Canada thought we'd be the leader when, uh, when the pot stocks were going crazy.
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[laughs] And they fall, of course, under our healthcare sector. But, uh, that never materialized.
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Uh, but I, I, I'm actually always surprised when I review this sector and realize how small of a, of an exposure you can get through Canada here. So yeah, thanks for that.
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Um, in the space, speaking of, you know, the, of, of medication, I always think or of the healthcare space, I always think of the innovation that occurs, and it's just an ongoing, uh, cycle here.
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Um, what do you think, or what are some of the innovations that you're seeing going on right now in the healthcare space that could propel growth in this sector going forward? Yeah, great question.
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And so when we think about those three big drivers, aging populations- Mm-hmm... developing markets, you know, they're, they're really big long-term growth drivers.
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So is technological innovation, but there's some really, really exciting things that are happening, you know, just in the past five years. And so when we think about, you know, innovation, of course, it's great.
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I can measure my heart rate on my, on my watch, and it tells me to stand up, but that's, that's, uh, you, that's wonderful. But the innovation that we're talking about are things like robotic-assisted surgeries.
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And so- Right... this isn't, this isn't a robot coming in. The, these are surgical tools, you know, that really give the, give the surgeons much more precision.
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Uh, and so we look at markets like that that are expected to double in the next, uh, four to five years. You know, that's, that's really massive innovation. And, you know, we look at things like, um...
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And everybody's heard of the weight loss drugs, um, GLP-1s. You know, this is, this is just a tremendous inno-innovation that we've seen.
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And so we're talking about a market that's going to go from $3 billion, and it's, uh, our view, an under, underhand pitch with a, a tennis ball, um, to $100 billion market. And this isn't because of the weight loss.
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This is about all the other ancillary benefits. So, you know, uh, think, thinking about things like major adverse cardiac events, sleep apnea, and other ongoing trials, so super exciting on that side.
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And of course, AI gets a lot of, you know, oh, it's gonna be the, um, you know, the- Mm-hmm... wonderful new tool that's going to innovate drugs, you know, uh, [laughs] in exponential fashion.
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That really hasn't been the case.
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Um, there's a great promise with, with AI, and we see it within, uh, areas like, uh, managed care, where there's some efficiencies on the, on operations and, and some on the insurance side.
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Uh, but we do see it in the clinical side, so things like, uh, software that will, um, basically create images of, of blocked arteries. And so it, it is happening.
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But AI, although e- everybody talks about it, it really hasn't taken off quite as much as a lot of people think, uh, compared to things like, as I mentioned, robotic-assisted surgeries and some of the drug developments that we're seeing.
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Um, yeah. To my mind, uh, the AI is a massive part of it. I guess it eventually will be, but you're saying right now they're not, it's not playing that big of a role, I guess is what I'm hearing.
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Um, it's interesting because I've found over the last number of years, I keep getting... Uh, I, I'm aging every year that goes by. And of course, you know, the, the healthcare, uh, concerns always grow along with that.
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So with our aging population, that's gonna be a major, a major, not really an innovation, but a major factor in this space altogether.
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Um, Paul, I have a couple of questions regarding US policy or just general, uh, policies.
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But before I do, um, earlier in this video, I, uh, shared with my viewers that your Harvest Healthcare Leaders Income ETF, the ticker I mentioned on that is HHL, it's almost 10 years old now.
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It has never missed a monthly distribution payment. And I know in some of the higher yielding funds, that's a concern that people have. So my question to you is just blunt here.
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How have you achieved that kind of consistency? And then most importantly, what do you see for the future of the fund? Yeah, great question.
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So HHL, I'm delighted it's coming into its 10th year, uh, within the next month. Uh, and we've paid the same distribution every month, uh, since the inception.
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In fact, we, we increased it a little bit just this past summer. Uh, and so we have a covered call strategy. It is an active- Mm-hmm... covered call strategy.
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Uh, it, underneath the surface, we do a lot of modeling on, uh, making sure that e- every month we can generate the cashflow.
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Uh, and so when, when I think about the history and when I look, uh, look go forward, um, you know, track records when you're generating these types of yields and these types of cashflow really matter.
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And so every month we go through a very structured process on let's get out there, make sure we're generating cashflow for the, uh, for the, uh, unit holders. Uh, and it does end up being tax efficient.
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So from an outlook perspective, you know, I, I come back to we've got 20 stocks. You know, they're dominant. They're, you know, amongst the biggest beneficiaries of some of those longer term trends.
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We do have an active overlay. We do have some changes to the portfolio. It tends to be fairly slow though, just given our upfront process that we go through. Mm-hmm.
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Uh, but when I think about kind of the next three, five, seven years, I, it just, uh, the sector to me is, um, looks fantastic.
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The r- visibility that you get in a sector like this where, you know, we have a lot of, there's a lot of narratives in the marketplace right now.
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And so, you know, when we think about, you know, variability of earnings, for example, healthcare is a superior good is what we call it.
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And effectively that means in up and down markets, we're generally going to be buying our, our healthcare needs, where perhaps some of the more cyclical areas over time, uh, and over a cycle, uh, will have a little bit more vo- volatility.
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And so, um, to short answer, absolutely sector, we, we're very, uh, positive on the outlook and, uh, positioned accordingly and making sure that we're diversified as well.Well, thanks.
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And yeah, I'll just say, you know, congratulations on that track record because that's, uh... you know, I, I often speak on our channel here about the...
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especially for someone in my demographic, the, the importance of the reliability and the dependability and consistency of cash distributions. So you guys are doing an awesome job there.
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Um, couple more questions for you, but I'm k- I'm kind of thinking almost here, Paul, that it is, uh, you know, I, I...
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it's maybe a two-prong question, but I'll just run through it and you can answer it however you feel, uh, you want to here. But, you know, we've just gone through a, a new election cycle in the US.
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We have some y- potential policy changes there in the heal- in the Canadian, uh, healthcare systems. Um, how could that affect the sector? How do you prepare for them as fund managers?
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And also, I guess the second part of that, there's a lot of, uh, increasing scrutiny on drug pricing, again, specifically focused in the US. So how do you feel that the fund managers of HHL, uh, can manage that?
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What can you do to mite- mitigate any risks, uh, due to any regulatory changes in this area? Is that a fair question to ask? Uh, b- e- uh, absolutely.
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And, uh, nobody likes talking politics, but, uh, but it's a necessity when we're talking about healthcare. Mm-hmm. And, you know, drug pricing, we, we often say is like a, a lightning rod for politicians. Mm-hmm.
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It, it hits their voter base, uh, very quickly and, and, you know, it often comes up in a lot of rhetoric.
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Um, so to take a step back though, when we think about the US healthcare system, [laughs] I, I, I've got this one chart, I...
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and I'm hoping we can put it up here, that it, it is just absolutely, uh, it, it explains everything so well when we think about how complicated the healthcare system is- Mm-hmm...
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and to affect change and all of the integrated and vested, um, parties. And so, you know, to affect change, first of all, is, is very complicated.
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And so when we think about past cycles and when, you know, politicians have, you know, come in and we think back to the Obama, um, President Obama, you know, the...
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at that time, healthcare was going to get destroyed because of the Affordable Care Act. Yet, when we look back over the cycle of, of his tenure, it was one of the better performing sub-sectors.
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And so, you know, there's a lot of, there's a lot of, um, rhetoric that- Mm-hmm... is very difficult to actually implement into actual policy.
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Now, that being said, when we look at, at some of the initiatives that have happened and you think back to the, again, Affordable Care Act, there was a lot of, a lot of positives that actually did get implemented.
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And so for additional change, when I start to think about some of the proposals that have, have happened, so Medicare, uh, negotiating drug prices, that's happening.
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And so there's always, uh, proposals that are coming down the pipeline.
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So what we do, we've got analysts that we deal with, political analysts, and so we will be following what are the potential changes, what are the potential companies that may be impacted. Mm-hmm.
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And so that's, uh, really important for us to be in front of.
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Uh, however, when I look from today and going forward, you know, the amount of policy initiatives that are, are potential, uh, although it does get a lot of press, it's actually fairly limited.
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And so, you know, from our perspective, you know, the politics, again, it becomes a lightning rod, but really there's not a whole lot that, uh, that we see coming down in, call it, the next three to five years, even with the political changes that we've seen.
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Um, one of my favorite lines was when, uh, President Trump and, uh, President Biden were debating and they... he said, you know, "What are you going to do f- to fix the Affordable Care Act?"
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And the, the response from President Trump was, you know, "Well, when we find out, we'll do it." [laughs] And so the system, [laughs] the system, uh, does have some fluidity.
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And again, one of the things we are keeping a very close eye on is in the Inflation Reduction Act, the, they're, uh, they are negotiating very specific, um, uh, drugs that fall within, call it- Mm-hmm...
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the top 10 off-patent drugs. Um, but from, again, taking, taking that big picture and looking back at that chart, it's very complicated when you, uh, when you're starting to look to make change.
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So from the whole sector's perspective, um, I think people focus a lot, maybe too much, on that little tiny component and are, are perhaps not looking at some of those bigger, longer term trends.
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Well, uh, yeah, thanks for that, that answer, Paul. It's funny 'cause I, when I was formulating that question to ask you there, I wasn't really thinking of how political it is.
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I mean, clearly it's a big deal politically, but I was just thinking more from the, you know, just the t- higher level policy changes.
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Didn't mean to throw you under the bus there, [laughs] but thanks for answering that- No, no, it's, it's, it's, it's-... very diplomatically [laughs]... it's, uh, it's, it's a valid question.
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And, uh, like I said, even, even when we think about the overall healthcare spend in the US- Mm-hmm... drug prices are actually less than 10%.
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And so, uh, but it t- you know, seems to get about 90% of the, uh, of the media attention. I guess it's the stuff that everybody, you know, pays and so they feel that, uh, kind of like buying bacon in the store, right?
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That's right. That's what you wanna buy and that's what, that's what the headline is. Well, Paul, um, thank you so much. I appreciate that, you taking the time. Uh, I... that's kind of what I wanted to do.
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I just wanted to, to ask you these sort of insight or, uh, get, get your insight on these questions to complement the rest of the video I'm preparing here.
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So again, thanks to you and your team, uh, for the work that you do there. And, uh, yeah, I'll just, uh, we'll sign off there. Thanks again for joining me. Thanks again for having me, Mark. You bet.
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So I think when you factor in everything that I said earlier and then you add to that the insight that Paul shared with us here, you can probably see how the healthcare sector is offering a compelling combination for an investor here: stability, um, innovation, and also growth.
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In my opinion, that makes it an excellent, uh, choice for investors, especially for those of us who are in the 40, uh, plus category.
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As I said earlier, I've got just over 10% of my portfolio directly in the healthcare space, so I think that's a pretty reasonable chunk there. Hope you learned something from the video today. I do welcome your comments.
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If you'd like to learn more about the Harvest Healthcare Leaders Income ETF, I will be sure to put a link in the description of this video. Thanks for watching.
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I'm gonna focus on the healthcare sector here, which to me is one of the most compelling areas that you would like to be invested in right now. When you think about it, healthcare touches all of our lives.
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If you're young, if you're old, it doesn't really matter. So it could just be a routine doctor visit. We're looking at cutting-edge treatment these days, or maybe it's the latest medical gadget.
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This is a space that's only growing more and more important. Now, personally, I've got just over 10% of my portfolio in the healthcare sector.
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What makes this space so interesting for investors, especially those of us who are over the age of 40, it blends stability, but also it has very strong growth potential.
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We have aging populations, we have increasing healthcare spending, and we have this constant innovation, and these are all driving the sector forward in ways that you really shouldn't be ignoring.
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Before I get into the details of my thesis, though, I would like to take a moment to thank Harvest ETFs for their support in preparing this video, and a little bit later in the video, I will be chatting with Paul McDonald.
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He's the CIO at Harvest Portfolios Group, and we're gonna be talking about some of these trends, and he's got some fascinating insights to share, especially when it comes to how Canadians can tap into the much larger global healthcare market.
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So stay tuned for that. Um, it is a great conversation. First, though, I wanna share my personal thoughts on why I think that healthcare is offering such an important and attractive investment opportunity right now.
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Let's start with the most obvious reason, aging populations. It's no secret that as we get older, our healthcare needs ramp up.
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Probably anybody who's 40 or 45 or older will be able to nod their heads and say, "I agree with that."
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Now, here in Canada, and this is a trend that we see globally as well, um, healthcare spending is increasing, and it increases dramatically, um, as you get older.
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To me, the important thing here, this isn't just a short-term thing, it's a long-term growth engine. It's not going anywhere anytime soon.
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Now, when I get to my interview with Paul, he really emphasizes here just how powerful the demographic shift is to the healthcare sector, so keep an ear out for that.
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He's also gonna talk about how our domestic healthcare system is tiny because of this global exposure is key, and he's gonna talk about how Harvest Healthcare Leaders Income Fund approaches this challenge.
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The fund is almost 10 years old now. It has never missed a distribution, and I know that is a concern for a lot of investors.
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Now, from that investor perspective here, this is one of my favorite parts of healthcare, is that it is constantly innovating, and I'm talking about things like robotic-assisted surgeries, the breakthrough we've seen recently in obesity drugs.
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This sector is just full of game-changing advancements. Robotic surgeries, they're doubling in market size, and of course, the weight loss drugs, they are just reshaping the entire industry.
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Another thing that sticks out to me here about the healthcare industry is its diversity. You've got pharmaceuticals, you've got biotech, you have medical devices, um, even healthcare services.
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They all come under one roof. So it's kinda like an investment buffet. You can pick and choose based on what aligns with your strategy.
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Another benefit to this is, of course, that diversity helps spread out risk while you're, uh, giving yourself exposure to these multiple growth drivers.
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Now, I need to talk just for a moment specifically about Canada here.
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This is something that a lot of Canadians don't realize, but our stock market here is severely underweight in the healthcare, especially when you compare it to the US.
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Healthcare makes up less than half a percent of the TSX, but it's over 10% of the global markets, and that is a massive gap.
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So if you're investing in Canada alone, then you're missing out on some of the biggest players, most of the biggest players in the entire healthcare world.
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Now, I wanted to shift to something a little bit more personal here for a moment. For those of us, as I mentioned, who are 40 years or older, healthcare checks so many boxes.
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Um, I think of, uh, the stability it offers, I think of the solid dividend yields typically you're gonna find here, and the resilience that this sector sees when the markets do turn down.
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So whether you're- if you're planning for retirement, whether you're just looking for reliable long-term growth, this is a sector that can deliver on multiple fronts.
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So that's kind of an overview of my take on the healthcare sector. I do wanna shift gears here for just a moment and go into my conversation with Paul.
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So in the discussion today, we're gonna be exploring why, as I mentioned, global exposure is so critical for Canadian investors.
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We're also gonna talk about the innovations that are transforming the industry and how this fund has maintained such an impressive track record. So here is my discussion with Paul. Hi, Paul.
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Thanks so much for joining me. I really wanted to bring you in on this discussion 'cause you...
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You know, this is what you do on a day-to-day basis, so, uh, your perspective on this will be very, very valued to our viewers, I'm sure. Uh, how are you doing today? I'm great. Thanks for having me back.
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Hey, really, really nice to see you again. So yeah, let's get right into it. I, I have a number of questions for you.
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Uh, first question I have are what are the advantages to the global healthcare portfolio when you're looking at it from a Canadian perspective? Anything that you can identify or share with our viewers? Yeah.
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I think the first thing we have to kinda do is, is just take a step back because, uh, you know, in Canada, the healthcare sector is less than half percent of the S&P TSX, and it's, you know, anywhere from 11 to 15% on the global market.
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And so we really aren't familiar within the Canadian markets of what healthcare investing actually looks like. Mm. So I would take a step back and kinda say, you know, the healthcare sector itself, it's, it's vast.
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It's very diverse. The f- the first thing people think about are, are drug manufacturers and biopharmaceuticals. Yes, that's a very key component, but there's multiple sub-sectors within healthcare.
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So when we think about things like medical devices, tools and equipment, the, the laboratory equipment, uh, and diagnostic, diagnostic equipment, and companies like Managed Care, for example, which are really the administrators of healthcare in the United States, as well as the ones that are orchestrating all the drug formularies and, um, uh, really integrated with, uh, the governments as they're the ones that administer Medicare and Medicaid, as well as commercial plans.
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So, uh-When we think about healthcare from a Canadian perspective, it's a massive sector.
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It has permanent non-cyclical tailwinds, you know, aging populations, technological innovation, and developing markets all really form, you know, a really positive outlook for the sector over the medium term.
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But from a Canadian's perspective, as I said, we really don't have the scale or the, um, or the diversity within our market.
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And a great example, um, is even within our Healthcare Leaders, which is 20 stocks, you know, those 20 stocks, the total market capitalization is, you know, one and a half times plus the entire S&P TSX.
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So, you know, it's a fabulous- Mm-hmm... sector with long-term growth dynamics, uh, but we do have to be looking outside of Canada for this. That's a lot of depth and insight there. Thank you for that.
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And it kind of takes my mind back to I don't know how many years, six, seven years ago, when I think Canada thought we'd be the leader when, uh, when the pot stocks were going crazy.
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[laughs] And they fall, of course, under our healthcare sector. But, uh, that never materialized.
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Uh, but I, I, I'm actually always surprised when I review this sector and realize how small of a, of an exposure you can get through Canada here. So yeah, thanks for that.
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Um, in the space, speaking of, you know, the, of, of medication, I always think or of the healthcare space, I always think of the innovation that occurs, and it's just an ongoing, uh, cycle here.
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Um, what do you think, or what are some of the innovations that you're seeing going on right now in the healthcare space that could propel growth in this sector going forward? Yeah, great question.
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And so when we think about those three big drivers, aging populations- Mm-hmm... developing markets, you know, they're, they're really big long-term growth drivers.
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So is technological innovation, but there's some really, really exciting things that are happening, you know, just in the past five years. And so when we think about, you know, innovation, of course, it's great.
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I can measure my heart rate on my, on my watch, and it tells me to stand up, but that's, that's, uh, you, that's wonderful. But the innovation that we're talking about are things like robotic-assisted surgeries.
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And so- Right... this isn't, this isn't a robot coming in. The, these are surgical tools, you know, that really give the, give the surgeons much more precision.
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Uh, and so we look at markets like that that are expected to double in the next, uh, four to five years. You know, that's, that's really massive innovation. And, you know, we look at things like, um...
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And everybody's heard of the weight loss drugs, um, GLP-1s. You know, this is, this is just a tremendous inno-innovation that we've seen.
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And so we're talking about a market that's going to go from $3 billion, and it's, uh, our view, an under, underhand pitch with a, a tennis ball, um, to $100 billion market. And this isn't because of the weight loss.
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This is about all the other ancillary benefits. So, you know, uh, think, thinking about things like major adverse cardiac events, sleep apnea, and other ongoing trials, so super exciting on that side.
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And of course, AI gets a lot of, you know, oh, it's gonna be the, um, you know, the- Mm-hmm... wonderful new tool that's going to innovate drugs, you know, uh, [laughs] in exponential fashion.
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That really hasn't been the case.
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Um, there's a great promise with, with AI, and we see it within, uh, areas like, uh, managed care, where there's some efficiencies on the, on operations and, and some on the insurance side.
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Uh, but we do see it in the clinical side, so things like, uh, software that will, um, basically create images of, of blocked arteries. And so it, it is happening.
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But AI, although e- everybody talks about it, it really hasn't taken off quite as much as a lot of people think, uh, compared to things like, as I mentioned, robotic-assisted surgeries and some of the drug developments that we're seeing.
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Um, yeah. To my mind, uh, the AI is a massive part of it. I guess it eventually will be, but you're saying right now they're not, it's not playing that big of a role, I guess is what I'm hearing.
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Um, it's interesting because I've found over the last number of years, I keep getting... Uh, I, I'm aging every year that goes by. And of course, you know, the, the healthcare, uh, concerns always grow along with that.
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So with our aging population, that's gonna be a major, a major, not really an innovation, but a major factor in this space altogether.
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Um, Paul, I have a couple of questions regarding US policy or just general, uh, policies.
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But before I do, um, earlier in this video, I, uh, shared with my viewers that your Harvest Healthcare Leaders Income ETF, the ticker I mentioned on that is HHL, it's almost 10 years old now.
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It has never missed a monthly distribution payment. And I know in some of the higher yielding funds, that's a concern that people have. So my question to you is just blunt here.
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How have you achieved that kind of consistency? And then most importantly, what do you see for the future of the fund? Yeah, great question.
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So HHL, I'm delighted it's coming into its 10th year, uh, within the next month. Uh, and we've paid the same distribution every month, uh, since the inception.
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In fact, we, we increased it a little bit just this past summer. Uh, and so we have a covered call strategy. It is an active- Mm-hmm... covered call strategy.
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Uh, it, underneath the surface, we do a lot of modeling on, uh, making sure that e- every month we can generate the cashflow.
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Uh, and so when, when I think about the history and when I look, uh, look go forward, um, you know, track records when you're generating these types of yields and these types of cashflow really matter.
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And so every month we go through a very structured process on let's get out there, make sure we're generating cashflow for the, uh, for the, uh, unit holders. Uh, and it does end up being tax efficient.
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So from an outlook perspective, you know, I, I come back to we've got 20 stocks. You know, they're dominant. They're, you know, amongst the biggest beneficiaries of some of those longer term trends.
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We do have an active overlay. We do have some changes to the portfolio. It tends to be fairly slow though, just given our upfront process that we go through. Mm-hmm.
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Uh, but when I think about kind of the next three, five, seven years, I, it just, uh, the sector to me is, um, looks fantastic.
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The r- visibility that you get in a sector like this where, you know, we have a lot of, there's a lot of narratives in the marketplace right now.
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And so, you know, when we think about, you know, variability of earnings, for example, healthcare is a superior good is what we call it.
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And effectively that means in up and down markets, we're generally going to be buying our, our healthcare needs, where perhaps some of the more cyclical areas over time, uh, and over a cycle, uh, will have a little bit more vo- volatility.
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And so, um, to short answer, absolutely sector, we, we're very, uh, positive on the outlook and, uh, positioned accordingly and making sure that we're diversified as well.Well, thanks.
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And yeah, I'll just say, you know, congratulations on that track record because that's, uh... you know, I, I often speak on our channel here about the...
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especially for someone in my demographic, the, the importance of the reliability and the dependability and consistency of cash distributions. So you guys are doing an awesome job there.
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Um, couple more questions for you, but I'm k- I'm kind of thinking almost here, Paul, that it is, uh, you know, I, I...
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it's maybe a two-prong question, but I'll just run through it and you can answer it however you feel, uh, you want to here. But, you know, we've just gone through a, a new election cycle in the US.
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We have some y- potential policy changes there in the heal- in the Canadian, uh, healthcare systems. Um, how could that affect the sector? How do you prepare for them as fund managers?
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And also, I guess the second part of that, there's a lot of, uh, increasing scrutiny on drug pricing, again, specifically focused in the US. So how do you feel that the fund managers of HHL, uh, can manage that?
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What can you do to mite- mitigate any risks, uh, due to any regulatory changes in this area? Is that a fair question to ask? Uh, b- e- uh, absolutely.
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And, uh, nobody likes talking politics, but, uh, but it's a necessity when we're talking about healthcare. Mm-hmm. And, you know, drug pricing, we, we often say is like a, a lightning rod for politicians. Mm-hmm.
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It, it hits their voter base, uh, very quickly and, and, you know, it often comes up in a lot of rhetoric.
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Um, so to take a step back though, when we think about the US healthcare system, [laughs] I, I, I've got this one chart, I...
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and I'm hoping we can put it up here, that it, it is just absolutely, uh, it, it explains everything so well when we think about how complicated the healthcare system is- Mm-hmm...
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and to affect change and all of the integrated and vested, um, parties. And so, you know, to affect change, first of all, is, is very complicated.
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And so when we think about past cycles and when, you know, politicians have, you know, come in and we think back to the Obama, um, President Obama, you know, the...
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at that time, healthcare was going to get destroyed because of the Affordable Care Act. Yet, when we look back over the cycle of, of his tenure, it was one of the better performing sub-sectors.
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And so, you know, there's a lot of, there's a lot of, um, rhetoric that- Mm-hmm... is very difficult to actually implement into actual policy.
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Now, that being said, when we look at, at some of the initiatives that have happened and you think back to the, again, Affordable Care Act, there was a lot of, a lot of positives that actually did get implemented.
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And so for additional change, when I start to think about some of the proposals that have, have happened, so Medicare, uh, negotiating drug prices, that's happening.
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And so there's always, uh, proposals that are coming down the pipeline.
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So what we do, we've got analysts that we deal with, political analysts, and so we will be following what are the potential changes, what are the potential companies that may be impacted. Mm-hmm.
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And so that's, uh, really important for us to be in front of.
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Uh, however, when I look from today and going forward, you know, the amount of policy initiatives that are, are potential, uh, although it does get a lot of press, it's actually fairly limited.
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And so, you know, from our perspective, you know, the politics, again, it becomes a lightning rod, but really there's not a whole lot that, uh, that we see coming down in, call it, the next three to five years, even with the political changes that we've seen.
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Um, one of my favorite lines was when, uh, President Trump and, uh, President Biden were debating and they... he said, you know, "What are you going to do f- to fix the Affordable Care Act?"
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And the, the response from President Trump was, you know, "Well, when we find out, we'll do it." [laughs] And so the system, [laughs] the system, uh, does have some fluidity.
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And again, one of the things we are keeping a very close eye on is in the Inflation Reduction Act, the, they're, uh, they are negotiating very specific, um, uh, drugs that fall within, call it- Mm-hmm...
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the top 10 off-patent drugs. Um, but from, again, taking, taking that big picture and looking back at that chart, it's very complicated when you, uh, when you're starting to look to make change.
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So from the whole sector's perspective, um, I think people focus a lot, maybe too much, on that little tiny component and are, are perhaps not looking at some of those bigger, longer term trends.
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Well, uh, yeah, thanks for that, that answer, Paul. It's funny 'cause I, when I was formulating that question to ask you there, I wasn't really thinking of how political it is.
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I mean, clearly it's a big deal politically, but I was just thinking more from the, you know, just the t- higher level policy changes.
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Didn't mean to throw you under the bus there, [laughs] but thanks for answering that- No, no, it's, it's, it's, it's-... very diplomatically [laughs]... it's, uh, it's, it's a valid question.
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And, uh, like I said, even, even when we think about the overall healthcare spend in the US- Mm-hmm... drug prices are actually less than 10%.
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And so, uh, but it t- you know, seems to get about 90% of the, uh, of the media attention. I guess it's the stuff that everybody, you know, pays and so they feel that, uh, kind of like buying bacon in the store, right?
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That's right. That's what you wanna buy and that's what, that's what the headline is. Well, Paul, um, thank you so much. I appreciate that, you taking the time. Uh, I... that's kind of what I wanted to do.
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I just wanted to, to ask you these sort of insight or, uh, get, get your insight on these questions to complement the rest of the video I'm preparing here.
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So again, thanks to you and your team, uh, for the work that you do there. And, uh, yeah, I'll just, uh, we'll sign off there. Thanks again for joining me. Thanks again for having me, Mark. You bet.
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So I think when you factor in everything that I said earlier and then you add to that the insight that Paul shared with us here, you can probably see how the healthcare sector is offering a compelling combination for an investor here: stability, um, innovation, and also growth.
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In my opinion, that makes it an excellent, uh, choice for investors, especially for those of us who are in the 40, uh, plus category.
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As I said earlier, I've got just over 10% of my portfolio directly in the healthcare space, so I think that's a pretty reasonable chunk there. Hope you learned something from the video today. I do welcome your comments.
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If you'd like to learn more about the Harvest Healthcare Leaders Income ETF, I will be sure to put a link in the description of this video. Thanks for watching.
