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Goldman Sachs Asset Management Statement on the Russia-Ukraine War. Read it here.    

Healthcare Quarterly 2022

Navigating Volatility

Not-for-profit healthcare systems saw robust returns in 2021, but the new year has proven turbulent with the ongoing Russia-Ukraine war, global supply chain disruptions, and labor force considerations.

The latest edition of the Healthcare Quarterly analyzes data from the first three quarters of 2021 and provides insights on the current not-for-profit healthcare landscape.

Key Findings

Market Performance

Not-for-profit healthcare systems saw solid returns in the 9 months ended September 2021. Performance could largely be attributed to strong US equity returns, with the S&P 500 returning 15.9% for the period.

 

Source: Goldman Sachs Asset Management and company filings. As of September 30, 2021. Data as of indicated quarter end. Past performance does not guarantee future results, which may vary.

Top of Mind for Not-for-Profit Healthcare Systems

 

Investment Philosophy

Alternative Investments

Appetite for Alternatives continues to grow, with investors looking to increase their allocations to growth equity, venture and buyout.

Trading

M&A Activity

Q1 2022 M&A activity was softer relative to pre-pandemic levels, seeing smaller and fewer transactions.  

Geopolitics

Supply Chain Bottlenecks

Constrained global supply chains may increase healthcare costs, delay procedures, and lower productivity.

Partnership

Labor Relations

Several hospital systems nationwide have had to scale down, impacting hundreds of employees in the process.

Q&A with Our Team

Carolyn Tavares

Head of Not-For-Profit Healthcare, Multi-Asset Solutions Group, Goldman Sachs Asset Management

 

In light of the market volatility experienced during the first quarter of 2022, what are your thoughts on the investment landscape and how have you been positioning client portfolios?

Two themes have driven market returns this year: inflation and Russia. Higher and more persistent inflation has caused interest rates to rise in realization that central banks will have to raise rates more quickly to combat high prices. The Russian invasion of Ukraine caused a broad sell-off in equities due to fears about the potentially wide-ranging impact of a war in Europe. At this point, we believe much of the negative news has been priced, and though risks have not disappeared, they have receded somewhat. We believe growth will moderate but remain above trend and are positioning portfolios to be neutral and taking down risk management trades that we previously had in our portfolios.

 

In our Healthcare Investment Diagnostic 2021, 63% of respondents stated that they plan to increase their private markets allocation. What do you think is driving this interest from healthcare organizations?

Private assets offer the potential for higher returns, which is particularly attractive as record-low interest rates and equity valuations mean that returns on traditional asset classes could be challenged in the coming years. In addition, we have seen a trend of companies staying private for longer, which requires investing in private assets if investors wish to participate in these companies’ growth. For investors with illiquidity tolerance, privates can be a key part of their portfolios.

Related Insights

General Disclosures

THESE MATERIALS ARE PROVIDED SOLELY ON THE BASIS THAT THEY WILL NOT CONSTITUTE INVESTMENT ADVICE AND WILL NOT FORM A PRIMARY BASIS FOR ANY PERSON'S OR PLAN'S INVESTMENT DECISIONS, AND GOLDMAN SACHS IS NOT A FIDUCIARY WITH RESPECT TO ANY PERSON OR PLAN BY REASON OF PROVIDING THE MATERIAL OR CONTENT HEREIN. PLAN FIDUCIARIES SHOULD CONSIDER THEIR OWN CIRCUMSTANCES IN ASSESSING ANY POTENTIAL INVESTMENT COURSE OF ACTION

All investing involves risk, including loss of principal.

Hedge funds and other private investment funds (collectively, “Alternative Investments”) are subject to less regulation than other types of pooled investment vehicles such as mutual funds. Alternative Investments may impose significant fees, including incentive fees that are based upon a percentage of the realized and unrealized gains and an individual’s net returns may differ significantly from actual returns. Such fees may offset all or a significant portion of such Alternative Investment’s trading profits. Alternative Investments are not required to provide periodic pricing or valuation information. Investors may have limited rights with respect to their investments, including limited voting rights and participation in the management of such Alternative Investments. Alternative Investments often engage in leverage and other investment practices that are extremely speculative and involve a high degree of risk. Such practices may increase the volatility of performance and the risk of investment loss, including the loss of the entire amount that is invested. There may be conflicts of interest relating to the Alternative Investment and its service providers, including Goldman Sachs and its affiliates. Similarly, interests in an Alternative Investment are highly illiquid and generally are not transferable without the consent of the sponsor, and applicable securities and tax laws will limit transfers.

Equity securities are more volatile than fixed income securities and subject to greater risks.

This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities.

THIS MATERIAL DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM IT WOULD BE UNAUTHORIZED OR UNLAWFUL TO DO SO.

Prospective investors should inform themselves as to any applicable legal requirements and taxation and exchange control regulations in the countries of their citizenship, residence or domicile which might be relevant.

This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. This material is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client’s account should or would be handled, as appropriate investment strategies depend upon the client’s investment objectives.

Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness.  We have relied upon and assumed without independent verification, the accuracy and completeness of all information available from public sources.

Views and opinions expressed are for informational purposes only and do not constitute a recommendation by Goldman Sachs Asset Management to buy, sell, or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change, they should not be construed as investment advice.

This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. This material has been prepared by Goldman Sachs Asset Management and is not financial research nor a product of Goldman Sachs Global Investment Research (GIR). It was not prepared in compliance with applicable provisions of law designed to promote the independence of financial analysis and is not subject to a prohibition on trading following the distribution of financial research. The views and opinions expressed may differ from those of Goldman Sachs Global Investment Research or other departments or divisions of Goldman Sachs and its affiliates. Investors are urged to consult with their financial advisors before buying or selling any securities. This information may not be current and Goldman Sachs Asset Management has no obligation to provide any updates or changes.

Past performance does not guarantee future results, which may vary. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur.

Date of first use: 5/4/2022. 277845-OTU-1603223

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