Polar Capital Global Healthcare Trust plc (the "Company"): The Company is an investment company with investment trust status and its shares are excluded from the Financial Conduct Authority’s (“FCA”) restrictions on the promotion of non-mainstream investment products. The Company conducts its affairs, and intends to continue to conduct its affairs, so that the exemption will apply.
The Company is an Alternative Investment Fund under the EU's Alternative Investment Fund Managers Directive 2011/61/EU as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018.
The Investment Manager: Polar Capital LLP is the investment manager of the Company (the "Investment Manager"). The Investment Manager is authorised and regulated by the FCA and is a registered investment adviser with the United States' Securities and Exchange Commission.
Key Risks
- Investors' capital is at risk and there is no guarantee the Company will achieve its objective.
- Past performance is not a reliable guide to future performance.
- The value of investments may go down as well as up.
- Investors might get back less than they originally invested.
- The value of an investment’s assets may be affected by a variety of uncertainties such as (but not limited to): (i) international political developments; (ii) market sentiment; and (iii) economic conditions.
- The shares of the Company may trade at a discount or a premium to Net Asset Value.
- The Company may use derivatives which carry the risk of reduced liquidity, substantial loss and increased volatility in adverse market conditions.
- The Company invests in assets denominated in currencies other than the Company's base currency and changes in exchange rates may have a negative impact on the value of the Company's investments.
- The Company invests in a concentrated number of companies based in one sector. This focused strategy can lead to significant losses. The Company may be less diversified than other investment companies.
- The Company may invest in emerging markets where there is a greater risk of volatility than developed economies, for example due to political and economic uncertainties and restrictions on foreign investment. Emerging markets are typically less liquid than developed economies which may result in large price movements to the Company.
Important Information
Not an offer to buy or sell: This document is not an offer to buy or sell or a solicitation of an offer to buy or sell any security, and under no circumstances is it to be construed as a prospectus or an advertisement. This document does not constitute, and may not be used for the purposes of, an offer of the securities of, or any interests in, the Company by any person in any jurisdiction in which such offer or invitation is not authorised.
Information subject to change: Any opinions expressed in this document may change.
Not Investment Advice: This document does not contain information material to the investment objectives or financial needs of the recipient. This document is not advice on legal, taxation or investment matters. Prospective investors must rely on their own examination of the consequences of an investment in the Company. Investors are advised to consult their own professional advisors concerning the investment.
No reliance: No reliance should be placed upon the contents of this document by any person for any purposes whatsoever. None of the Company, the Investment Manager or any of their respective affiliates accepts any responsibility for providing any investor with access to additional information, for revising or for correcting any inaccuracy in this document.
Performance and Holdings: All data is as at the document date unless indicated otherwise. Company holdings and performance are likely to have changed since the report date. Company information is provided by the Investment Manager.
Benchmark: The Company is actively managed and uses the MSCI All Country World Index/Healthcare as a performance target. The benchmark is considered to be representative of the investment universe in which the Company invests. The performance of the Company is likely to differ from the performance of the benchmark as the holdings, weightings and asset allocation will be different. Investors should carefully consider these differences when making comparisons. Further information about the benchmark can be found at: www.mscibarra.com.
Third-party Data: Some information contained in this document has been obtained from third party sources and has not been independently verified. Neither the Company nor any other party involved in compiling, computing or creating the data makes any warranties or representations with respect to such data, and all such parties expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any data contained within this document.
Country Specific Disclaimers
United States: The information contained within this document does not constitute or form a part of any offer to sell or issue, or the solicitation of any offer to purchase, subscribe for or otherwise acquire, any securities in the United States or in any jurisdiction in which such an offer or solicitation would be unlawful. The Company has not been and will not be registered under the United States Investment Company Act of 1940, as amended (the “Investment Company Act”) and, as such, the holders of its shares will not be entitled to the benefits of the Investment Company Act. In addition, the offer and sale of the Securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”). No Securities may be offered or sold or otherwise transacted within the United States or to, or for the account or benefit of U.S. Persons (as defined in Regulation S of the Securities Act). In connection with the transaction referred to in this document the shares of the Company will be offered and sold only outside the United States to, and for the account or benefit of non-U.S. Persons in “offshore- transactions” within the meaning of, and in reliance on the exemption from registration provided by Regulation S under the Securities Act. No money, securities or other consideration is being solicited and, if sent in response to the information contained in this document, will not be accepted. Any failure to comply with the above restrictions may constitute a violation of such securities laws.
Further Information about the Company: Investment in the Company is an investment in the shares of the Company and not in the underlying investments of the Company. Further information about the Company and any risks can be found in the Company’s Key Information Document, the Annual Report and Financial Statements and the Investor Disclosure Document which are available on the Company's website, found at: https://www.polarcapitalglobalhealthcaretrust.co.uk
Fund Manager Commentary As at 29 November 2024
November saw a return to a more risk-on environment after October’s more muted performance. Global equity markets posted good returns, led by cyclical sectors such as consumer discretionary, financials and industrials. It should be no surprise that healthcare lagged the broader market in the month given the higher risk appetite displayed by investors. However, there were also sector-specific drivers that caused healthcare’s underperformance. The best performing subsectors were healthcare information technology, healthcare distributors, managed care and healthcare services, while biotechnology, healthcare facilities, pharmaceuticals, and life sciences tools and services had a more challenging month.
US politics took centre stage in November. After a closely fought race against Kamala Harris, Donald Trump secured a second mandate as president, with the Republican Party overturning the Democrats’ majority in the Senate and retaining control of the House of Representatives. Equity markets reacted positively to this outcome, as the president-elect’s agenda is viewed as pro-growth and he has promised to cut taxes, increase deficit spending, roll out extensive deregulation measures and impose tariffs on imports to support American businesses. On the flipside, these policies, if enacted, could stoke inflation again and make the case less compelling for lower interest rates. Consequently, the US 10-year Treasury yield spiked on the day of the election results.
Though healthcare was not seen as a key topic for the Republicans during this election cycle, Trump’s general stance on healthcare is seen as supportive of Medicare (the government healthcare plan for the over-65s), negative for Medicaid (which provides healthcare for adults and children with limited income) and therefore facilities, and ambiguous for pharmaceuticals with no clarity on whether he wishes to change the Inflation Reduction Act which established a mechanism that allows the government to negotiate the price paid by Medicare for a list of drugs.
Healthcare’s underperformance in the month was exacerbated by Trump’s pick for Secretary of Department of Health and Human Service (HHS), Robert F Kennedy Jr (RFK). This nomination introduced a greater level of uncertainty for healthcare investors given some of RFK’s public views on vaccines and anti-obesity drugs. Unsurprisingly stocks exposed to these themes came under pressure in the month. It remains to be seen whether RFK is officially appointed, given opposing opinions from both side of the political spectrum. As such, some of the outsized share price moves in the month on the back of his nomination may offer compelling opportunities in the longer term.
Fund performance
The Company’s NAV was down 0.6% in November, behind the benchmark, the MSCI All Country World Daily Net Total Return Health Care Index) which was up 0.1% for the month.
Positive contributors relative to the benchmark in November were Insulet, Medley and Amgen.
Insulet delivered a strong set of Q3 results and, more importantly, gave an upbeat outlook for new patient starts in and outside the US. Medley’s strong performance follows the company’s 3Q24 financial results that disclosed positive pricing dynamics in the HR platform business. The Fund had no exposure to Amgen during the period, with the shares reacting negatively to the disclosure of clinical data for the company’s obesity asset MariTide. Not only did the weight-loss data fall short of expectations but the tolerability profile of the drug also compared poorly to the products already on the market.
Negative contributors in the period under review were Amvis, Swedish Orphan Biovitrum and Zealand Pharma.
Amvis had a challenging month, suffering from material operating profit downgrades driven by a significant increases in staffing costs. There was no thesis-changing news for Swedish Orphan Biovitrum during November, with the shares giving up a good deal of their post-Q3 gains. Feedback suggests some concerns around the magnitude of near-term margin expansion, a view we disagree with as the company rightly continues to invest in both its commercialised assets and R&D, in an attempt to secure sustainable medium and long-term growth.
Our constructive stance on Zealand Pharma remains, with the short-term weakness driven by some of the anti-obesity medication rhetoric coming out of the US, primarily driven by the Department of Health and Human Services nominee, RFK’s agenda to ‘Make America Healthy Again’. This is an ideal that makes a huge amount of sense, especially the elimination of ultra-processed foods that include added fat, starches and sugar, but one that potentially comes with practical limitations, especially in the near term.
There was little trading activity in the month with the exception of exiting the position in life sciences tools and services company Avantor. A company struggling to generate positive momentum, the capital was recycled into positions carrying greater levels of conviction.
Outlook
Healthcare has been out of favour for the majority of 2024, with the nomination of RFK for Secretary of HHS creating even more short-term uncertainty and pressure on the sector. However, with the industry’s innovation engine continuing to bear fruit, the demand for healthcare products and services continuing unabated and relative valuations starting to look really attractive, the near-term volatility has created a compelling, medium-term investment opportunity.
James Douglas
James studied medicinal chemistry and has worked in healthcare, in sales, research and fund management, throughout his career
Gareth Powell
Gareth worked at a pharmaceutical company and in academic laboratories before setting up the healthcare team in 2007
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