ASX 200 healthcare shares provided some pain relief today. Here's why

The healthcare sector ended Thursday as the best performer on the ASX.

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Key points

  • The ASX 200 Health Care index closed slightly lower on Thursday but still outperformed the broader market
  • The smaller cap healthcare shares helped make it the best-performing sector on the ASX
  • Global healthcare index leader CSL closed just 0.27% lower having been in positive territory for much of the day

A number of ASX shares in the S&P/ASX 200 Health Care Index (ASX: XHJ) outperformed the broader market today.

The benchmark S&P/ASX 200 Index (ASX: XJO) backtracked yet again, ending Thursday's session 1.97% lower at 6,568.1 points.

In contrast, the healthcare sector was the best performer on the ASX today, falling just 0.19% after spending much of the day in the green.

What's happening in the ASX 200 healthcare sector?

The biggest and most heavily weighted share price within the ASX 200 healthcare sector is CSL Limited (ASX: CSL).

The global biotech outperformed the ASX 200, closing just 0.27% lower at $269.06. Much like the healthcare index, it was in positive territory for most of the day before retreating late in the session.

However, it was the smaller cap companies such as Paradigm Biopharmaceuticals Ltd (ASX: PAR) and Recce Pharmaceuticals Ltd (ASX: RCE) that led the charge. They gained 10.29% and 9.88%, respectively.

Paradigm reported a positive release before market open, stating it had received official acceptance of an Australian patent application. However, there was no fresh news out of Recce Pharmaceuticals.

Meanwhile, the Race Oncology Ltd (ASX: RAC) share price gained 4.84% after the company released the latest interim results from its preclinical cardioprotection program.

While the ASX 200 Health Care index has rebounded 3.2% this week, it's still down 12% year-to-date.

The ASX has been hit hard in recent weeks following high inflation levels and aggressive rate hikes.

During the March quarter, inflation rose by 5.1%, the highest increase in many years. This led the Reserve Bank of Australia to ramp up the official cash rate by 0.5% to 0.85%.

Foolish takeaway

Investing in an ASX-index tracking fund is considered a much safer alternative than picking an individual company.

This is because the sector is relatively impervious to wild swings from any one share price.

Furthermore, it's worth noting that an index has historically provided long-term stable growth.

It is often the most boring investments that reap the largest rewards.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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