Investment Approach

Medex was formed through the collective experience at some of the largest investment management firms in healthcare with the aim to deliver superior results for investors through a differentiated offering. With a passion for researching and investing in the healthcare industry, we hold ourselves to the highest standards in performance and governance.

Developing an advantage over other market participants and generating attractive returns across market cycles is not trivial. Only with the right combination of people, process and product, can one aim for an optimal outcome.


We focus on Healthcare only, a vast global investment universe which we know well

As an investment manager, we specialize in global healthcare, which is where our passion, but also our experience and expertise is. Healthcare is one of the largest sectors in the global economy, yet also one of the most diverse and complex. In its largest market, the US, healthcare spending is the largest component of government spending. Together with private sector spending, it comprises 17% of GDP, larger than any other sector. Healthcare has steadily been outgrowing overall economies around the world, with drivers of this being population growth, aging, innovation, and the overall advancement of economies and people’s desire for better care. While these underlying drivers remain firmly in place, strains on government budgets creates both opportunities and challenges to this growth.

  • Our investment process is based on primary fundamental research

    Stock prices generally reflect the consensus view of a company's outlook; however, consensus views suffer from a range of factors including biased or conflicted opinions, incomplete, selective or 'reverse' analysis, herd mentality, inexperience etc. Understanding true prospects and value drivers, and their difference in relation to consensus creates the investment opportunities we seek to invest in.

    Our investment process is entirely fundamental, and builds on our strong network, modelling and investment experience in the sector. We monitor a universe of more than 500 companies, aiming to find the highest conviction names. Regular company meetings, investor and medical conferences support this process, as does proprietary scientific and financial analysis often aimed at uncovering an angle not well understood or addressed by the street.

    At any time in the investment process, we aim to invest in areas where our views are meaningfully different from the prevailing market consensus.

  • We apply top-down and bottom-up risk management
    Healthcare stocks can sometimes gyrate wildly, with single day moves of > 30% (in both directions) not uncommon. This makes prudent risk management essential and it is something we don’t compromise on. While we don’t aim to invest for the ‘known unknowns’, ‘unknown unknowns’ sometimes do create situations that can’t be fully avoided. This is why, in addition to managing overall portfolio risk, we also apply stock-specific based risk management, with a view to mitigate downside risk from adverse scenarios.
  • We are incentivized for alpha not beta

    In the growing landscape of passively managed funds, we are acutely aware that active equity managers are expected to deliver return from stockpicking rather than market movement - some might say skill rather than luck. However, many approaches often incentivize managers to take inappropriate directional risk. This can lead to asymmetric pay-offs, potentially exposing investors to capital losses due to significant market drawdowns such as happened in 2008.

    It is not our mandate to predict markets, nor are we incentivized for it. In our view, mitigating significant risk to capital is best achieved by minimizing correlation to markets and making performance less reliant on directions of such markets. One certainty is that market drawdowns such as those in 2008 will re-occur, with chances of that only rising with time.

  • We co-invest with investors on the same terms

    As managers, we put our money where our mouth is. As such, we are co-invested into the fund on the same terms and conditions as all other investors, understating our commitment to success for clients.

  • Our infrastructure setup allows us to focus on investing

    Managers should be researching and investing above everything else. However, operations and compliance can be a time consuming distraction. For this reason, we use a setup which delivers institutional-level risk oversight, operational management and compliance support. This leaves operational aspects to those best equipped to manage them, allowing us to focus entirely on developing the best investment ideas for investors.

Healthcare is a sector with many investment opportunities on an ongoing basis

Across its universe, Healthcare comprises a vast array of investment opportunities. The most important are pharmaceuticals and biotechnology, followed by medical devices. However, the delivery of healthcare, involves many other subindustries. These include, for example, healthcare insurers, healthcare services, distributors, hospitals, and healthcare IT.

We believe that Healthcare is an excellent sector for well entrenched investors:

  • It is primarily driven by innovation, generating new investment opportunities on an ongoing basis. It ranks on top in number of IPO’s and M&A transactions, and its industry is perpetually in a fluid state, making market inefficiencies more prevalent.
  • It is arguably the most idiosyncratic in nature, with company fundamentals strongly prevailing over industry fundamentals. This results in a wide dispersion of stock returns, providing investment opportunities at all points in time.
  • It is technically, scientifically, legally and commercially complex, global in nature, and rapidly changing. This allows specialized investors to develop and arbitrage information advantages, or an ‘edge’, over generalist investors.
  • With its heavy reliance on financings and M&A, consensus is more likely to show a higher degree of bias compared to other sectors, implying larger differences between buy and sell side expectations.