Healthcare spending makes sector a good investment

The healthcare industry is banking on continued growth in the coming years, and so apparently are investors.

"To me, demographics are destiny. With the massive cohort known as baby boomers (myself included) reaching ages where we'll need more sophisticated care, we know demand for services is rising," wrote Bob Frick, managing editor of Personal Finance, in the publication Investing Daily.

That demand is also occurring outside of the United States. Frick noted that global healthcare spending is at $9 trillion a year, a figure that is projected to rise to more than $14 trillion by the end of the decade.

Healthcare spending had been relatively placid in the U.S. in recent years, although it appears to be on the uptick again, according to recent data from the Altarum Institute's Center for Sustainable Healthcare Spending. 

Drug prices contributed to much of that increase, but evidence suggests it does not contribute that much to the overall economy of healthcare spending in the U.S.

And observers at Forbes suggest that a once-in-a-lifetime event such as the Great Recession may have also contributed to the slowdown in spending, suggesting it will soon pick up steam in a swifter fashion.

That rise may be among the reasons that Americans are not spending money at the retail level the way they once were, according to Frick. And that is the reason he suggests "overweighting" financial portfolios in healthcare stocks--funds that he suggested are unsexy have had returns of 20 percent or more in recent years.

To learn more:
- read the Investing Daily article 
- check out the Forbes article