What happened
Robeco analysis shows global healthcare equities lagged broader markets significantly over the past two years, with the MSCI World returning 11.3% compared to 6.7% for healthcare through August. Capital shifted heavily toward AI hyperscalers, dragging pharmaceutical valuations to a 35-year low discount of 39% in mid-2025. Sentiment has since rebounded as regulatory risks cleared, lifting sector valuations back toward historical averages.
Why it matters here
Portfolio concentration in mega-cap technology has left many global investors underweight healthcare despite compounding corporate earnings. As capital diversifies beyond AI infrastructure, healthcare offers Australian investors defensive earnings growth and attractive relative valuations in an environment where global economic growth remains uncertain.
What to watch
Quarterly global healthcare fund flow data and major international pharmaceutical earnings releases to evaluate the sustainability of the sector's valuation recovery.
Source
robeco.com