The net asset value (NAV) figure includes dividends paid out during the period. The NAV total return in the period was +7.1%, compared to +13.3% in the corresponding period 12 months earlier. Over the same time frame, the trust’s benchmark index, the MSCI World Healthcare Index, achieved a total return of +3.9%.
During the first half of the trust’s fiscal year, exposure to Healthcare Information Technology (IT) and Healthcare Technology sectors was scaled back, largely on valuation grounds, although the market’s rotation into valuation stocks has enabled the trust to more or less build back its exposure to these two sectors.
The commitment to the Diagnostics sector was reduced as prices got toppy but the investment manager has begun to rebuild exposure to this sector. The Dental sector is regarded as too expensive but the Services and Tools sectors continue to be attractive owing to highly visible and predictable growth.
An interim dividend of 3.015p has been declared, being exactly half of the full-year target dividend of 6.03p; as usual, a scrip dividend alternative will be available to shareholders.
In his commentary on the FTSE 250 group’s half-year results, chair Randeep Grewal noted the company's shares continued to trade at a modest premium of 1.2% to NAV, on average, over the period in review, albeit with a slightly more elevated level of volatility in the premium.
The investment manager said markets at present are not obviously cheap when thinking about the price of growth compared to historical norms and there are some lingering political headwinds, such as pressure on the US government to reform a healthcare system that is among the most expensive in the Western world.
As for the pandemic, the investment manager’s expectations are for normalisation in procedure volumes toward the end of the year” and this seems to be well priced, in terms of both valuations and consensus expectations”.
Use of the currently available surgical capacity should continue to improve but the investment manager thinks it is unrealistic to expect system-wide capacity will return to normal levels until the “pandemic is firmly in the rear-view mirror”.
“We would broadly agree with the notion that the second half [H2] of the year could prove more tricky for equity investors than H1 2021 has been. Within this though, healthcare feels well placed to us. The restrictions impacting us all are slowly abating and the innate demand for healthcare services is undiminished. As such, we can be very confident in the broader positive fundamental outlook for healthcare during H2 2021 and beyond and as such, we do not expect healthcare to underperform the wider market in the manner that it did during the first half of the year,” the company said.
Shares in BB Healthcare Trust were unchanged in early deals.