17 Jan Health care investing and Obamacare’s future

Q. My Vanguard Health Care Index Fund is slumping. I’m wondering if it makes sense to buy a few more shares. Healthcare still exists, even if the GOP tampers with Affordable Care Act (ACA).
— Investor

A. Before we talk about that specific investment, we want to remind you that the decision to buy, hold or sell any investment should be part of your overall financial plan.

That should include your investment goals, risk tolerance and time horizon.

Now to owning and possibly adding to a position in Vanguard Health Care.

Jim McCarthy, a certified financial planner with Directional Wealth Management in Rockaway, reminds us of the saying, “Buy low, sell high.”

He said the health care sector underperformed throughout 2016, so the fund, like others in the sector, has decreased in value.

“The GOP will make changes to the ACA but given that the president-elect has chosen a pro-business position, the health care industry, in general, should benefit,” McCarthy said. “With the post-election volatility behind us, we should refocus on health care fundamentals, which signal that the sector remains strong and intact regardless to the changes to ACA.”

Also, McCarthy said, regardless of the politics, we have an aging population in the U.S. so health care is and will continue to be a vital part of our society.

“As for the Vanguard Health Care Index fund (VHCIX), it has decent track record and low costs,” McCarthy said. “It has ranked in the top 25 percent of funds in its sector for one-year and three-year returns, but in the top 50 percent of funds for five-year and 10-year returns.”

Pharmaceuticals, on the other hand, took a big hit — nearly $25 billion in only 20 minutes — during the president-elect’s speech last week. You can expect to see more of a see-saw until we know the details of the new administration’s policy proposals.

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This post was first published in January 2017.