10th May 2016 08:25
LONDON (Alliance News) - Polar Capital Global Healthcare Growth & Income Trust PLC on Tuesday said it has underperformed its benchmark in the first half of its financial year.
In a statement, the trust said its NAV total return was 0.5% in the six months ended March 31, compared with a 5.1% rise in the MSCI Healthcare Index (total return in Sterling with dividends reinvested) benchmark.
"The underperformance was caused by adverse stock-specific moves in certain small caps and stock selection in the pharmaceutical sector," said Chairman James Robinson.
"It was an extremely volatile six months which saw healthcare move out of favour on the back of an outbreak of 'Hillary-phobia'. The political rhetoric surrounding the US presidential election and in particular the comments from Hillary Clinton in late September regarding drug pricing set the tone and created quite a headwind for the healthcare sector. This has meant that both the pharmaceutical sector and the biotechnology sector have underperformed," Robinson added.
"The better performing areas were those not facing this perceived pricing pressure, namely medical supplies and equipment, insurers, hospitals and medical services. Given our investment mandate where we currently have 66% of the portfolio invested in pharmaceuticals, it is very difficult for our managers to replicate the structure of the benchmark. The portfolio is more a pharmaceutical portfolio than a healthcare portfolio," Robinson said.
"The US election remains an overhang and thus we expect volatility to continue ahead of the election in November. We believe that fears about drug pricing are overdone; there may well be some policy initiatives on this front but these are unlikely to pose a threat to those companies that are genuine innovators. We therefore feel that once the election is out of the way, the increasingly positive fundamentals for the healthcare sector should begin to reassert themselves," the chairman added.
Polar Capital Global Healthcare said it has paid or will pay 1.30 pence in dividends in respect of the six months ended March 31, compared with 1.20p for the corresponding period a year earlier.
Shares in Polar Capital Global Healthcare were up 0.9% at 170.52p on Tuesday morning.
By Hannah Boland; [email protected]; @Hannaheboland
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