Polar Capital Global Healthcare results for the year that ended on 30 September 2014 have been released. Over the year the fund underperformed its benchmark by 5.1%, generating a return on net assets of 19.7% vs. 24.8% for the MSCI ACWI/Healthcare Index. The shares moved from a premium of 1.8% to discount of 5.4% so shareholders only saw an 8% uplift in their share price over the year. The fund has a hard wind-up date in January 2018 so the discount will narrow between now and then (though it could still get wider in the meantime).
They increased the dividend year on year from 3.35p to 3.5p.
The Chairman attributes the underperformance to being underweight both US stocks and biotech stocks. The fund targets an above-average yield and those two areas of their universe don’t yield that much.
On an absolute basis, they say the most important contributors to performance were positions in AstraZeneca, Merck and Eli Lilly within their pharmaceutical portfolio and Intercept, Cardio3 BioSciences and Intermune within their biotech portfolio. Intercept deserves a special mention as the stock moved from $72 to $445 in two days on the back of very positive clinical trials data for a drug it developed to tackle non-alcoholic fatty liver disease (steatohepatitis). On the downside, holdings in Glaxo, Takeda, Vocera and Summit all underperformed.
PCGH : Polar Capital Global Healthcare hit by widening discount