The outlook for the US healthcare reform initiative remains uncertain, but regardless of its outcome there are compelling reasons to invest in the healthcare sector, according to a new report from New York-headquartered wealth manager Rockefeller and Company.

The thinking of Rockefeller’s white paper, Investment Opportunities in Healthcare Reform, is based on the fact that the intense healthcare reform debate in the US has temporarily driven down the valuations of healthcare stocks. According to the firm, healthcare stocks are currently trading at a 44 per cent discount to the general market which, as Rockefeller notes, is a larger discount than even during the Clinton administration's effort to reform healthcare.

US president Barack Obama has made health care - involving a big extension of state involvement into the country's private sector system - one of the signature issues of his administration. Critics say the reforms will be expensive, coming at a time when the US is already grappling with huge public debt. 

Rockefeller predicts that the most likely legislation to come out of the healthcare reform initiative will essentially insure some 30 million currently uninsured individuals – to obvious benefit of the healthcare sector. But regardless of the outcome of the debate, Rockefeller foresees that a range of compelling secular trends will remain fully intact.

Some firm’s predictions make for grim reading, but from an investment perspective they make sense: the ageing populations of many countries, augurs well for the healthcare sector, as does the increasing prevalence of chronic conditions such as obesity, diabetes and neurodegenerative disorders. In addition, while in developed markets healthcare spending is predicted to continue to outstrip GDP growth, the rising prosperity in emerging economies should also drive increased demand for healthcare, in the firm’s view.

Another further driver identified by Rockefeller are the continued technological advances made in the healthcare sector. Research and development is already highly incentivised in developed countries, while stronger intellectual property laws among emerging markets are also likely to fuel innovation, the firm predicts.

“As emerging societies continue to become wealthier, they will likely spend more money on medical care as their populations seek to live longer and healthier lives. Moreover, as the storm cloud of healthcare-reform uncertainty hovers over Washington, short-sighted investors are missing an opportunity to participate in a sector that is expected to grow in excess of global GDP for the foreseeable future,” Rockefeller said in a release on the white paper.