What it does
Polar Capital Global Healthcare (LON:PCGH) is a UK investment trust with a fixed life that is expected to expire in early 2025.
On 20 June 2017, the company adopted a new capital growth investment policy, changed its name, and issued zero dividend preference shares via its subsidiary PCGH ZDP Plc.
The company’s investment objective is to generate capital growth by investing in a global portfolio of healthcare stocks across all four healthcare sub-sectors.
How it’s doing
At the close of business on 31 March, NAV per share was 221.72p, compared to a share price of 196p or a discount to net assets of almost 12% - up from 8% at the end of last year.
In the latest portfolio update, from 6 March, US immuno-oncology giant Bristol Myers Squibb was at the top of the list at 4.9% of the portfolio, followed by Denmark's Novo Nordisk at 4.6%.
UK pharma giant GlaxoSmithKline, which had been the largest holding in February's update, was no longer in the list, while January favourite Merck & Co was also nowhere to be seen.
In terms of sector exposure, three-quarters of the trust were invested in healthcare equipment, pharmaceuticals and biotechnology.
Healthcare equipment remained the largest segment of the portfolio, but its share was down to below 30% from 36.8% at the end of September, while exposure to pharmaceuticals had decreased to 23.5% from 26.9% and biotechnology jumped to 23.2% from 14%.
For the geographies, the US market’s dominance of the portfolio has swollen to 79.6%, dwarfing all other markets in single figures.
Healthcare market view
The fundamentals for the sector are “”robust with good sales and earnings strength relative to other areas of the market”, the trust's managers said in January.
Medical device companies “enjoy a cycle of innovative new products”, while pharma behemoths are “attractively valued, generate significant free cash flow and carry high dividend yields”.
Life science tools and services face “robust” end-markets, while biotechs continue to innovate, with new technologies such as gene and cell therapy creating new platforms for growth.
“These fundamentals should persist over the years ahead, generating attractive returns for investors,” the managers said, with M&A also likely to continue in an industry that is “searching for growth, is highly fragmented and could benefit from scale and cost synergies”.
However, with uncertainty stemming from a US election coming due later in 2020, the US healthcare share valuations relative to the market are not far off the lows seen during previous episodes of political stress.