Healthcare boost for Pengana
A decision to significantly increase the healthcare weighting in expectation of COVID-19 treatments has paid off for the Pengana High Conviction Equities fund.
In April, the fund increased its exposure to healthcare from 40% to 60% with around half of that in cancer or COVID-19 treatment firms.
The weighting was even more dramatic as the fund was highly concentrated and only held 20 stocks.
However, this had since been reduced to 51% although its top five largest holdings remained all healthcare stocks including two Australian firms Genetic Signature and Telix Pharmaceutical.
While the fund had lost 7% since the start of the year, it saw positive returns of 6.3% during May following the sector increase.
Top performers included Danish firm Bavarian Nordic, US gene editing company Sangamo, Swiss firm AstraZeneca and US vaccine producer Moderna.
Manager James McDonald said: “As COVID-19 restrictions ease the number of new cases is now on the rise again which is beginning to weigh on markets. Testing volumes have been rapidly increased which should give governments a better ability to control the spread of the virus compared to earlier in the year.
“Vaccine programs continue to advance with the Oxford University vaccine study expecting results by September. Its production partner AstraZeneca expects to have hundreds of millions of doses ready by that time and two billion doses ready by early next year.
“US vaccine producer Moderna should also have results by November with large amounts of vaccine ready by year end. Several new promising antibody treatments have also entered human clinical studies and should yield results within a few months.”
However, it was not the case that all healthcare stocks performed universally positive as exposure to US nerve replacement producer Axogen was a detractor after non-essential surgeries were cancelled in order to prioritise COVID-19 treatments.
According to FE Analytics data, the Pengana High Conviction Equities fund returned 14.5% over one year to 29 May, 2020 versus returns by global equity sector of 8.5% within the Australian Core Strategies universe.
Performance of Pengana High Conviction Equities fund versus global sector over one year to 29 May, 2020
AUTHOR
Laura Dew
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