The current equity bear market regime and recessionary concerns due to the fast pace of Fed rate hikes have prompted investors to seek defensive income-oriented strategies. We believe the healthcare sector provides both stable dividend and defensive characteristics. Demand for healthcare services continues to increase, with a growing and aging population enjoying longer lifespans. In addition, continued innovation in the sector drives the introduction of new treatments for more complex diseases and expanding market opportunities for Healthcare companies. Many large cap healthcare stocks generate durable cash flow, due to their diverse product offerings, and can maintain pricing power and pass-through costs in inflationary environments. These are attractive defensive investment characteristics. Since the 1960s, Healthcare has outperformed the broader market by approximately 3 percentage points annualized when inflation was elevated as shown in the figure below. In the past decade, Healthcare has also been one of the only parts of the market to consistently outperform when growth was slowing and real interest rates were rising.