The healthcare sector has been one of the most rewarding industries for ASX investors over the last decade.
Australia's ageing population and ever-increasing demand for medical products and services have been a near-cyclonic tailwind for the healthcare sector, and I see no reason why this trend will not continue for at least the next decade and beyond.
As we roll over into a new month, here are 3 ASX healthcare shares I would buy for exposure to this booming sector.
CSL Limited (ASX: CSL)
CSL has a rather interesting history. The company was actually a government-owned body for most of its history (CSL stood for Commonwealth Serum Laboratories), before being privatised in 1994. Today CSL is a medical research and biotechnology company that specialises in disease prevention, blood plasma products and vaccines. CSL operates one of the largest and most efficient plasma collection networks, with more than 140 centres in the US and Europe.
I like CSL for its constant focus on tomorrow's challenges. Over 10% of CSL's revenue is re-invested into Research and Development, ensuring that it will always be at the frontier of its fields. Long-term CSL shareholders are a very happy group, with their shares appreciating over 550% in the last decade, not including dividends!
Ramsay Health Care Ltd. (ASX: RHC)
Ramsay Health Care is Australia's largest private hospital operator, with over 223 hospitals across several countries. Ramsay has historically enjoyed strong returns on invested capital due to its ownership and management of flagship private hospitals in Australia. Its reputation for high-quality care and its scale gives Ramsay significant leverage in contracts with private health insurers, which enables the company to manage costs very effectively. This has enabled Ramsay to establish a significant pricing advantage, which has underpinned its successful expansion both in Australia and overseas, where it has built a strong presence in Europe in particular.
I can only see the demand for Ramsay's services continuing to rise if the company manages to maintain its reputation and quality services. Public funding for healthcare will continue to face challenges in the years ahead, and therefore private providers like Ramsay are likely to play an increasingly significant role.
The Ramsay share price has also soared over 550% over the last 10 years.
Betashares Global Healthcare ETF – Currency Hedged (ASX: DRUG)
Despite the slightly over-relevant ticker symbol, this ETF gives investors an avenue for a more international exposure by tracking an index of the largest global healthcare companies, excluding Australian stocks. This offers a fantastic way to diversify into healthcare stocks, especially considering the ASX represents roughly 2% of publicly-traded companies worldwide.
The ETF has returned a healthy (no pun intended) 11.15% over the last year and has a management fee of 0.57%. DRUG is also currency-hedged, so you don't have to worry about foreign currency movements adversely impacting your investment.
Foolish takeaway
I believe healthcare will continue to be a lucrative sector to invest in, and these three ASX stocks would be a great place to start. I think all have the potential to outperform the ASX 200 index over the next decade and should be considered for any growth-orientated portfolio.
For investors looking at alternatives to traditional healthcare stocks, this ASX company could be uniquely positioned to profit an explosive new industry in 2019.
