The “apo Digital Health” equity fund intends to improve exposure to the digital healthcare market for private investors.
apoAsset launched its first digital health equity fund for private investors on 1 June 2017. The fund is managed by Apo Asset Management (apoAsset), a joint venture of the Deutsche Apotheker-und Ärztebank eG (apoBank, German Pharmacists and Doctors Bank) and the Deutsche Ärzteversicherung AG (German Doctors Insurance). Ongoing demographic changes coupled with the priority of healthcare are suggested factors for developing and launching the strategy.
As a sector relatively immune to economic fluctuations there are expectations that healthcare will grow returns more strongly than the general market, apoAsset suggests. Around 150 companies which play a significant role in the digital health sector, the manager notes, adding that the fund will invest in around 50-60 of the most promising ones. Key investments involve specialists, for example, WebMD, that focus on one or few particular digital health fields, which may offer access to higher growth potential. There are additional investments in certain core technology stocks to balance against potential volatility, such as IBM or Alphabet, helping create a more diverse portfolio.
“Digital health contributes enormously to the efficiency of healthcare systems and therefore also to healthcare quality,” Kai Brüning, senior portfolio manager Healthcare at apoAsset and responsible for the new fund. “For the ADH, we identify companies worldwide with particularly good chances to be winners in the merger between healthcare and IT.“ Markus Müschenich, founder of the German Federal Association of Internet Medicine, CEO of Flying Health Incubator and member of the Scientific Advisory Board of apoAsset will be the adviser to this fund. The area involves well established healthcare companies investing in digitalisation, as much as tech companies expanding their healthcare activities – also through cooperation and mergers and acquisitions.
Ensuring a sustainable business model in the area of portfolios is particularly important because of the highly regulated healthcare market. New digital players need to be able to develop well, even if the legal framework changes. Also, the competitive position and attractive valuations play a key role for the equity selection. What matters for the fund managers are not short-term hype, but long-term potential. They must also act independent of any benchmark.
“We want to empower private investors to benefit easily from digital health’s unique growth potential. They need professional stock picking, a broadly diversified portfolio and a transparent fund concept based on international standard rules (Ucits). The new fund provides this package for the first time”, says Brüning. “Our long-term strategy is to open up all healthcare growth opportunities with top funds to any investor.
Digital health is such a unique opportunity. Two renowned European university clinics – Barcelona and Hamburg – work already ‘paperless’, and this is just the beginning.”
Artificial Intelligence (AI) will certainly have a major impact on healthcare in future apoAsset suggests. Currently, it is still in the early cycle of developments around this. But apoAsset is experiencing a number of ideas from its venture hub startup boot camp in Berlin, and believes this will eventually lead to a key breakthrough. “We have a great success history of healthcare investments, for example, the equity fund apo Medical Opportunities which invests in all healthcare subsectors worldwide.
The new digital health equity fund has a clearly different focus, but we want to achieve a similar success story in the long run – for both private and professional investors”, added Brüning.