20th Dec 2019 08:11
(Alliance News) - Polar Capital Global Healthcare Trust PLC on Thursday said its underperformed against its investment benchmark in its most recent financial year, weighed down by its holdings in healthcare services and biotechnology.
The trust's net asset value per share total return for its year ended September 30 was negative 1.2%, a significantly weaker performance than the positive 3.1% return by its benchmark, the MSCI ACWI Health Care Index total return in sterling with dividends reinvested.
Net asset value per ordinary share fell 2.1% to 236.88 pence as at September 30 from 241.91p the year before, while NAV per zero dividend preference share rose 3.0% to 106.99p at the end of September from 103.87p the prior year.
The healthcare stocks investor's portfolio co-managers, James Douglas and Gareth Powell, said that while Polar Capital Global Health was correct to take overweight positions in life sciences and tools and healthcare equipment, its stock selection was disappointing.
Further, Douglas and Powell said that healthcare services and biotechnology stocks had proven to be "the biggest drags on performance" in the financial year. Although its remains overweight in healthcare equipment and life sciences and tools, the trust has reduced its biotechnology exposure.
The company declared a second interim dividend of 1.10, meaning that the company has paid or declared dividends totalling 2.10 pence per share, up 5.0% from 2.00 in financial 2018.
Chair James Robinson said: "The outlook going into 2020 appears to be supportive for large cap healthcare companies based on their defensive growth profile, strong balance sheets and commitment to innovation. With the economic cycle now quite mature, however, the outlook for smaller companies is more challenging and we have therefore reduced our exposure here to 10.2% awaiting better opportunities over the months ahead.
"Sentiment for the healthcare sector has been poor, largely due to healthcare policy likely to be an increasingly important part of the debate ahead of the US presidential election in November 2020. With sentiment at extremes last seen in 2008 it seems likely that the fog will eventually clear. Fundamentals for the healthcare sector remain robust with good sales and earnings strength relative to other areas of the market. We expect these fundamentals to persist over the years ahead, generating attractive returns for investors."
Robinson is also expecting to face currency headwinds in financial 2020, as sterling is likely to strengthen as Brexit concludes. At present, the trust has not "engaged in any currency hedging" according to its chair, and though this may change the "normal stance" of Polar Capital Global Health "is to run unhedged currency positions".
Shares in Polar Capital Global Health were down 0.7% at 235.30 pence in London on Friday morning.
By Anna Farley; [email protected]
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