In light of the frequently shifting policies under the Trump administration, the global financial markets have experienced increased volatility, with the healthcare sector demonstrating notable resiliency. According to Prudential, despite the healthcare sector index (XLV) dropping by a maximum of 11.2% since early 2025, this performance is significantly better than the volatile Philadelphia Semiconductor Index, which has a peak drop of 34.9%, or the S&P 500 index's peak drop of 18.9%.

Prudential's global healthcare fund manager, Jiang Yiqian, noted that the healthcare industry's capacity to maintain stability during market turbulence is largely due to the essential nature of its products, which are less sensitive to economic cycles. Especially after the imposition of new tariffs, which raised concerns about inflation and economic slowdowns, demand for healthcare services remained steady, leading to lower earnings volatility for companies in this sector. Jiang further described medical services, pharmaceuticals, and medical devices as the most defensive sub-sectors within healthcare, showing a strong ability to withstand downturns.

The strong cash flow of the healthcare sector was evident even during the 2007-2009 financial crisis, where major firms in pharmaceuticals and biotech maintained stable operating margins between 32% and 38%, indicating continued robust demand for drugs and healthcare-related products during economic downturns. In an environment of unclear economic prospects, with diminishing growth advantages for the S&P 500's leading companies, market funds have increasingly shifted towards industries with solid fundamentals, further attracting investments to healthcare. In terms of valuation, healthcare stocks present a striking opportunity, with the S&P 500 trading at a 19x price-to-earnings ratio compared to 16x for healthcare. Jiang advised investors facing rising market uncertainty to consider including healthcare in their portfolios, strategically investing in promising biotech stocks to create a defensive asset mix with growth potential.