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How to Beat the Market with Healthcare Stocks

Earlier this week, bourse operator Singapore Exchange Limited (SGX: S68) had launched SGX Thematic Indicesa suite of new stock market benchmarks for a number of different sectors in Singapore’s stock market.

Among the new indices launched was the SGX All Healthcare Index, an index made up of some of the largest and most tradeable healthcare stocks in Singapore. This is one that has beaten the broader market’s return since the start of 2011.

Here’s a list of the Top 5 Healthcare stocks in the index along with their index-weights as of November 2015, according to the Singapore Exchange:

Here are some interesting points which I have noted from the index.

  • The annualized total return for the SGX All Healthcare Index since its inception on January 2011 is 8.4%.
  • For context, the SPDR STI ETF (SGX: ES3) – an exchange-traded fund mimicking the market barometer, the Straits Times Index  (SGX: ^STI) – has clocked in an annual compound total return of 7.21% from its inception on April 2002 up till the end of October this year.
  • Meanwhile, the Straits Times Index itself has lost 7.3% in total from January 2011 to November 2015.
  • The healthcare index’s weighted-average dividend yield is 2.5%
  • IHH Healthcare is the largest healthcare stock of the lot, recording a market cap of $17.3 billion.
  • The SGX All Healthcare Index includes Parkway Life REIT and First REIT, both of which did not make it into the SGX S-REIT 20 Index. Notably, First REIT’s future is in flux due to a possible delisting from Singapore’s exchange.
  • Raffles Medical Group Ltd (SGX: R01), one of the best performers in the SGX over the past ten years, is another component of the index.

The index gives you a mini-tour of the companies in the healthcare space in Singapore. As the return of the index has beaten that of the broader market over the past few years, companies within may be a good starting point to search for long-term winners.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Parkway Life REIT.