This infographic is available as a poster.
Visualizing the Big Business of Heart Health
Heart health affects almost one out of every two Americans, creating implications on both personal and economic levels. At the same time, this means that there is an opportunity for investors to get behind heart-health innovations and holistic solutions.
In this infographic from New York Life Investments, we explore this growing ecosystem and how it can benefit both the future of health and your portfolio.
Why Invest in Heart Health?
Each day, the heart beats 100,000 times—equal to a staggering 3.5 billion beats in a lifetime.
However, this crucial organ is affected by many ailments. Heart disease tops the list as the number one killer among Americans: 650,000 people in the U.S. die of heart disease annually.
In response, multiple industries from Big Tech to wellness are actively working on heart health solutions. By 2030, the cardiovascular disease tech market is projected to reach $40B, making it a growing market for investors to dive into.
Below, we explore some case studies of companies that are aligned with healthy hearts and preventative solutions.
The Fight to Detect Heart Disease
Irregular heartbeats are a key symptom of stroke and hospitalization. In fact, the most common and costly reason for preventable hospital stays is heart failure:
- 1.1M hospital stays annually
- $11.2B total annual costs
To combat this, Apple and Stanford Medicine launched the Heart Health Study to develop an algorithm that detects irregular activity.
How the Apple Heart Study app worked
- Participants wore Apple Watches that detected irregular heart rhythms, known as atrial fibrillation
- 2,161 (0.52%) were notified of irregular heart rhythms, prompted to schedule a telehealth consultation, and were sent ECG patches to wear for a week
Of these notified participants…
- 34% Experienced atrial fibrillation
- 76% Sought medical attention
Along with the algorithm’s 84% positive predictive value, the Apple Heart Health study promoted higher engagement with health services and telehealth providers. Heart health is big business, and Big Tech is only getting started.
Innovating the Tools for Living
Type 2 diabetes is another major risk factor for heart disease. To help fight against diabetes, Fitbit is at the intersection of heart health and technology with glucose monitoring.
Among the projects it has under development:
- $6 million investment in Sano, a company developing a coin-sized patch for glucose tracking
- Partnering with Dexcom to monitor how physical activity influences diabetes in a pilot program
While it’s clear that preventative tools are critical on an individual level, their impact on a community-wide scale is striking. For example, for every $1 invested in bike and walking trails, almost $3 in health costs are prevented.
Reversing the Trend: Why It’s a Good Move
A key part of preventing heart failure is to get moving—both before and after critical issues arise.
Importantly, activewear has become one of the top performing categories in fashion since quarantine took hold. As a leader in activewear, Lululemon is designing smart clothing with innovative and lightweight materials.
Another avenue they have ventured into is home fitness, with its acquisition of Mirror in July, 2020 for $500 million. Health and wellness have boomed in the age of COVID-19, and Lululemon’s shares have climbed significantly:
Price Return (2020)
- LULU: 49.6%
- S&P 500: 16.3%
- DJIA: 7.3%
It’s clear that activewear is deeply interwoven into consumer demand.
The Future of Life-Saving Strategies
The problem with heart disease is that the related costs are only intensifying.
By 2035, the direct medical costs linked to cardiovascular disease are estimated to top $748 billion, while indirect costs are projected to reach $368 billion.
But this also means that there’s a promising area of investment opportunity—with the potential for life-changing impact. As societies are hit with the twin threats of COVID-19 and aging populations, the demand for integrative heart solutions is more urgent than ever.
What Lies Ahead: 2021 Economic Projections and the Year in Review
Are 2021 economic projections looking up? As we look back on a historic year, this graphic outlines key growth forecasts for the year ahead.
What Lies Ahead? 2021 Global Economic Projections
With over 1.4 million deaths worldwide, COVID-19 has impacted nearly every corner of society.
Yet, hope seems suddenly near. Crucial vaccine developments are emerging, with many of the 320 vaccines in advanced trials. Still, questions remain around the timing and effectiveness of the potential vaccine. With this in mind, the International Monetary Fund (IMF) projects that this year, global real GDP will fall –4.4%, bouncing back 5.2% in 2021.
As we look back on a historic year, this infographic from New York Life Investments traces the notable events of 2020, along with growth forecasts for the year ahead.
2020: Year in Review
From a deadly virus to U.S. elections, how did we get to where we are now?
Since COVID-19 was declared a pandemic, $12 trillion in global fiscal response helped stabilize the economy. Despite financial markets facing their sharpest drop in 30 years, the S&P 500 rebounded in record speed—recovering losses in under four months.
|S&P 500 Price Returns||Global COVID-19 Cases|
Source: European CDC via Our World in Data
*As of November 27, 2020
In April, oil prices dropped into negative territory for the first time ever. The combination of both a demand shock and supply shock led oil futures to fall to -$37.63. Since then, oil prices recovered modestly, hovering close to $45 in November.
In another historic event, wildfires ravaged through the West Coast of the U.S., burning five million acres across Oregon, California, and Washington. Meanwhile, COVID-19 cases continued to climb. Global reported cases exceeded the 25 million mark by September.
Finally, on November 16, Moderna announced that its COVID-19 vaccine was 94.5% effective, just days after the 2020 president-elect, Joe Biden was announced.
Despite the number of record-breaking incidents over the year, the tech-dominated S&P 500 held steady. Here is how key economic figures have materialized against the backdrop of 2020:
1. Government Debt
Government debt rose 20% relative to GDP in advanced economies, while debt has grown at a slower pace in emerging market and low-income countries.
|Gross Debt Position (% of GDP)||2019||2020|
|Emerging market and middle-income economies||53%||62%|
|Low-income developing countries||43%||49%|
Overall, inflation was lower than pre-pandemic levels, sitting at around 1.5%.
While commodities and medical supplies saw their prices rise, weak global demand for overall goods cancelled out these inflationary effects.
3. Sector Performance
Service sectors were hit among the hardest as social distancing measures were enacted to stave off the pandemic.
In the first half of 2020, accommodation, arts, and entertainment sectors fell close to 15% compared to 2019. Meanwhile, banks were cushioned with cash reserves in the event of unexpected risks, breaking roughly even in year-over-year growth.
While the economy has encountered numerous challenges, the IMF expresses cautious optimism for the year ahead.
2021: Global Growth Outlook
Since the IMF’s June projections, economic growth forecasts have somewhat improved. Primarily, optimism is being driven from Q2 GDP growth that exceeded expectations.
|Global Growth Forecasts||April||June||October|
By contrast, pre-pandemic projections for 2020 and 2021 were 3.3% and 3.4%, respectively.
Over 2020, China enacted several strict measures to contain COVID-19 early in the outbreak, a key factor behind its economic momentum. Meanwhile, India is projected to rebound 8.8%—higher than any other country in 2021, according to IMF-reported countries.
While several factors remain uncertain, what will pave the way for a global recovery?
Analysis of a Successful Global Recovery
Growth projections are improving, but economic success will hinge on these three layers.
|3 Layers for Economic Success|
|1||The path of COVID-19||Public health measures & the race for a vaccine
Impact on domestic economic activity
|2||Global consumer demand||Tourism activity
|3||Financial market sentiment and capital flows||Supply disruptions
To prevent further unwanted outcomes, it will be essential that policy support is not withdrawn too soon.
The Road to Recovery
With these factors in mind, how could global conditions transform in the months ahead?
|Best Case Scenario||Worst Case Scenario|
|Accelerating global demand|
Maintaining liquidity for countries in need
Fair and equal vaccine
implementation across countries
|Weakened economic activity
Tightening lending conditions for countries in need
Country-level vaccine disparities
In the face of these obstacles, the health of the global economy rests on sufficient consumer demand, capital flows and COVID-19 containment. With news of vaccine developments underway, the outlook is appearing a bit brighter.
How Carbon Offsetting Works, and What Investors Should Know
Eliminating all harmful GHG emissions is not yet possible, but carbon offsetting offers a route for businesses and funds to become more sustainable.
This infographic is available as a poster.
Carbon Offsetting: What Investors Should Know
In 2016, an international treaty known as the Paris Agreement was negotiated by member nations of the UN Framework Convention on Climate Change.
The long-term goal of this agreement is to limit the increase in global temperature to below 3.6°F (2°C) over the next century. Achieving this target will require the world to develop cleaner solutions across all areas of the economy, from energy to transportation.
In this infographic from New York Life Investments, we introduce carbon offsetting, an activity used by both businesses and investment funds that has the potential to accelerate the development of a more climate-friendly economy.
What are GHG Emissions, and Where do They Come From?
Greenhouse gases (GHGs) are a family of gases known to trap heat in the Earth’s atmosphere. The most prevalent among them is carbon dioxide (CO₂), which accounts for 80% of America’s GHG emissions. Common sources of CO₂ include fossil fuel consumption and deforestation.
Businesses are often significant emitters of CO₂, but due to the complexity of their production chains, emissions can be difficult to track. To combat this, a company’s carbon footprint is measured across three scopes:
- Scope 1: These are direct emissions from a company’s operations. An example would be the CO₂ emitted by company-owned factories.
- Scope 2: These are indirect emissions from a company’s operations, such as the pollution generated from purchased electricity.
- Scope 3: These are indirect emissions from the company’s supply chains. Common sources include the extraction of raw materials and business travel.
Although we understand that GHGs are harmful to the planet, our ability to eliminate them is limited by technology and costs. Fortunately, this is where offsetting can help.
How Does Carbon Offsetting Work?
Carbon offsetting is a method of neutralizing one’s emissions by investing in GHG-reducing projects. The benefits of these projects are measured by the amount of CO₂ equivalent (CO₂e) that they avoid or absorb. Then, the company or fund that is engaging in the carbon offsetting project will then receive one carbon credit for every tonne of CO₂e negated.
Below are the three common types of GHG reduction programs.
1. Energy efficiency projects
These projects reduce energy consumption. One example is the distribution of energy-efficient cookstoves in Rwanda, a country where many people rely on firewood and charcoal. By distributing 10,800 cookstoves throughout the country, nearly 60,000 tonnes of CO₂e can be avoided each year.
2. Forestry projects
These projects nurture and protect our CO₂-absorbing forests. One notable example is the Garcia River forest protection program, which ensures the longevity of California’s redwood forests. The program oversees over 9,600 hectares which has been estimated to store almost 80,000 tonnes of CO₂e annually.
3. Renewable energy projects
These projects reduce our dependency on fossil fuels. They are especially effective in economies such as Taiwan, where 75% of electricity capacity relies on fossil fuels. Thanks to its strong coastal winds, Taiwan is able to remove 328,000 tonnes of CO₂e per year with just 62 wind turbines.
How is Offsetting Regulated?
Carbon offsetting in America is primarily a voluntary activity, but some state governments have made it mandatory for significant polluters. Here’s how both markets are regulated.
The Voluntary Market
The voluntary market is regulated by a variety of third-party organizations such as Verra, Gold Standard, and American Carbon.
They conduct audits on GHG reduction projects to ensure each one meets four broad criteria:
- Measurability: The GHG savings of the project must be measurable
- Verifiability: The results of the project must be verified on an annual basis
- Sustainability: Each project should have a minimum lifespan of seven years
- Additionality: GHG reductions of project must be considered in reference to a baseline scenario
Carbon credits are only issued after a project has passed this verification process.
The Mandatory Market
Some U.S. states have introduced carbon offsetting schemes to meet their climate goals. One of the largest is California’s Cap and Trade program which was introduced in 2013.
The program is targeted at businesses that emit over 25,000 tonnes of CO₂e annually, and works by setting a “cap” on total annual emissions. This cap is reduced each year, and overpolluting businesses must acquire carbon credits to offset their excess pollution. These can be purchased from state-administered auctions or from other firms.
Revenues generated from California’s carbon credit auctions are used to fund various GHG reduction projects, including:
- 690,000 acres of land preserved or restored
- 287,000 rebates issued for zero-emission and plug-in hybrid cars
- 108,000 urban tree plantings
- 150,000 energy efficiency projects installed in homes
By 2030, California’s emissions cap is intended to reach 200.5 million tonnes of CO₂e, marking a near 50% reduction from its 2015 level.
What Role can Investors Play?
A majority of U.S. investors consider themselves to be values-based, meaning they care about the societal and environmental impacts of their investments. This mentality is increasing the demand for ESG investing and placing pressure on corporations to become more sustainable.
For example, the percentage of S&P 500 firms that publish sustainability reports has risen from just 20% in 2011 to 90% in 2019. More importantly, a growing number of U.S. firms are cooperating with the CDP (formerly the Carbon Disclosure Project) to report their emissions and set formal reduction targets.
|Year||Companies with active emissions reduction targets||All other companies reporting to the CDP||Total|
Source: CDP 2020
Some of the world’s largest oil producers are also taking action—a testament to the significance of these shareholder concerns. Royal Dutch Shell announced earlier in 2020 that it intends to fully offset its Scope 1 and 2 emissions.
Does Offsetting Really Help?
Carbon offsetting programs such as the one implemented by California have the potential to generate revenues and encourage innovation. Critics, however, have suggested it has a number of design issues.
One such issue is the fact that California’s carbon credits do not expire. This could allow companies to stockpile credits and ignore future cuts to the emissions cap. Another concern is that the companies covered by California’s cap and trade will simply pass their higher costs to the consumer, although this claim didn’t seem to hold up in a 2016 study conducted by UCLA.
Other inefficiencies within the program may exist, but its benefits are hard to ignore. By the end of 2019, the revenue generated from California’s carbon credit auctions totaled $12.5 billion. Of this amount, over $5 billion has been invested in GHG reduction projects to date.
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