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Revolutionizing Healthcare Investments

As the healthcare landscape experiences unprecedented shifts, investors must adapt to the emerging trends shaping the market. Dhruv Vig, the founder and CEO of Langer Holdings, has taken significant steps to redefine health tech investments. He joined host Karla Jo Helms on the podcast Disruption Interruption to discuss the challenges posed by outdated investment models in the context of a booming AI-driven healthcare market.

The Exploding AI Healthcare Market

Recent projections indicate that the U.S. AI healthcare market will grow from $8.45 billion in 2024 to an astonishing $194.88 billion by 2034. The number of healthcare organizations adopting artificial intelligence technologies has already reached a staggering 86%. Despite this monumental growth trajectory, investors face significant hurdles, largely due to outdated classifications and passive index structures that fail to accurately reflect the innovative companies driving the sector forward.

"The way we invest in health tech is stuck in the past—legacy indices overlook game-changing companies," warns Vig. His critique of traditional ETF models emphasizes how they often ignore high-potential innovators in favor of outdated classifications that can obscure the true value within the sector.

The Wild Wild West of Health Tech Classification

According to Vig, the problem with traditional ETFs lies in a widespread misclassification of health tech companies. He describes this phenomenon as "the wild, wild west" of public markets. Many companies use healthcare buzzwords to misrepresent their core business, leading to significant misallocations of capital within ETF structures. For instance, cannabis companies, which are unrelated to health tech, are often mistakenly grouped with actual health tech firms—creating substantial confusion for investors.

Vig notes that genuine health tech companies account for about 50% of the sector's returns during certain periods. However, a thorough analysis reveals that only approximately 100 out of 6,000 global healthcare companies truly meet the stringent definition of health tech—keeping those companies underweighted in broad market funds.

Active Management: The Future of Precision Investing

Vig's response to these deficiencies is the launch of the first-ever pure play health tech ETF, made possible through active management that identifies and prioritizes genuine health technology investments. Rather than relying on outdated algorithms, Vig's firm has assembled a committee of experts from various sectors within healthcare. These professionals rigorously evaluate each company against strict criteria to ensure full exposure to true health tech assets.

"We're not just building another ETF; we're setting the industry standard definition for health tech and creating a pure play where investors can trust that all holdings truly belong in this space," Vig explains. This expert-driven approach facilitates real-time adjustments to the investment portfolio as the unique health tech landscape evolves—something that passive indices simply cannot provide.

According to research from Deloitte, active management ETFs currently command approximately $1 trillion in assets, with forecasts predicting growth to $10 trillion over the next decade. This surge will likely coincide with the anticipated $10 trillion in AI market value creation.

A New Perspective on Health Investments

Vig urges every investor to closely assess their healthcare portfolios: "When you sit down and look at your portfolio, do the work. Really ask what am I investing in and why am I investing in it?"

With Vig's leadership, Langar Holdings is paving the way for smarter, more strategic healthcare investments. By shifting focus from legacy passive funds to active management driven by deep sector knowledge, investors can access unprecedented opportunities within the transformative world of health tech.

As the healthcare sector continues to embrace artificial intelligence and innovative solutions, it is crucial for investors to align their strategies with the clear and present shifts shaping the industry. Investors must utilize the latest insights, setting a course for more informed and impactful investment decisions that can fuel future advancements in healthcare.

This revelatory approach not only creates pathways for smarter investments but also helps in maintaining the integrity and advancement of health technology globally. Investors would be wise to heed Dhruv Vig's insights to navigate the complexities of healthcare investments effectively.