Polar Capital Global Healthcare Trust plc Fund Data

Global equity markets delivered positive returns in August, led by the energy, materials and technology sectors. Energy and materials were buoyed by higher commodity prices, in particular oil, gold and copper. Meanwhile, a rally in software stocks coupled with NVIDIA's strong second quarter (Q2) results allayed some fears about AI infrastructure spending and reignited interest in technology. Healthcare also outperformed the broader market. Within the sector, healthcare technology, biotechnology, life sciences tools and services, and healthcare equipment were the strongest performing subsectors. Healthcare services, managed healthcare and healthcare supplies had a more challenging month. Slowing momentum in the real US economy, combined with persistent inflationary pressures, presented a conundrum for policymakers, with the two forces pulling the Federal Reserve (Fed) in opposite directions. Payroll growth has stalled: July showed a loss of 23,000 jobs. The headline overstates the deterioration, however, given the labour force is shrinking as immigration curbs bite. The breakeven rate of payroll growth has therefore fallen sharply and the market is now closer to a 'low-hiring, low-firing' equilibrium than to genuine demand weakness which would be disinflationary. Growth also decelerated but remains robust, with solid consumer spending and artificial intelligence (AI)-driven equipment investment offsetting falling government outlays and a widening trade drag. Inflation, meanwhile, is proving sticky. The combination of resilient economic growth, a steady labour market from a demand perspective and stubborn inflation meant that bond yields, especially long-dated ones (those maturing further into the future), moved higher in August. The announcement that the Treasury was doubling its buybacks of long-dated bonds provided only a brief respite, with yields falling on the day. That said, at the Jackson Hole meeting on 28 August, Fed Chair Kevin Warsh underlined his commitment to bringing inflation down and suggested interest rates may need to rise in the coming months. For now, equity and bond markets will remain hostage to the Fed's next move: will it hold rates steady and hope a slowing economy is enough to bring inflation down or will it raise rates to curb inflation and risk pushing the economy close to recession? We were encouraged to see healthcare stocks outperform in August despite the higher-yield environment and we believe three factors contributed to the sector's positive relative performance. First, a continuation of the rotation away from AI-driven sectors, especially in the early part of the month; second, a Q2 earnings season that was generally strong for healthcare companies; and third, excitement generated by the announcement that a personalised cancer 'vaccine', intismeran autogene, developed by Moderna and Merck & Co*, delivered encouraging Phase 3 (i.e. late-stage clinical trial) results in combination with Keytruda in the adjuvant melanoma indication – patients whose melanoma has been removed surgically and who then initiate therapy to reduce the risk of recurrence. The news added over $80bn in market capitalisation between the two companies involved. It also had a favourable halo effect not just on biopharma companies but also those that benefit indirectly such as life sciences tools and services.

Global equity markets delivered positive returns in August, led by the energy, materials and technology sectors. Energy and materials were buoyed by higher commodity prices, in particular oil, gold and copper. Meanwhile, a rally in software stocks coupled with NVIDIA's strong second quarter (Q2) results allayed some fears about AI infrastructure spending and reignited interest in technology. Healthcare also outperformed the broader market. Within the sector, healthcare technology, biotechnology, life sciences tools and services, and healthcare equipment were the strongest performing subsectors. Healthcare services, managed healthcare and healthcare supplies had a more challenging month. Slowing momentum in the real US economy, combined with persistent inflationary pressures, presented a conundrum for policymakers, with the two forces pulling the Federal Reserve (Fed) in opposite directions. Payroll growth has stalled: July showed a loss of 23,000 jobs. The headline overstates the deterioration, however, given the labour force is shrinking as immigration curbs bite. The breakeven rate of payroll growth has therefore fallen sharply and the market is now closer to a 'low-hiring, low-firing' equilibrium than to genuine demand weakness which would be disinflationary. Growth also decelerated but remains robust, with solid consumer spending and artificial intelligence (AI)-driven equipment investment offsetting falling government outlays and a widening trade drag. Inflation, meanwhile, is proving sticky. The combination of resilient economic growth, a steady labour market from a demand perspective and stubborn inflation meant that bond yields, especially long-dated ones (those maturing further into the future), moved higher in August. The announcement that the Treasury was doubling its buybacks of long-dated bonds provided only a brief respite, with yields falling on the day. That said, at the Jackson Hole meeting on 28 August, Fed Chair Kevin Warsh underlined his commitment to bringing inflation down and suggested interest rates may need to rise in the coming months. For now, equity and bond markets will remain hostage to the Fed's next move: will it hold rates steady and hope a slowing economy is enough to bring inflation down or will it raise rates to curb inflation and risk pushing the economy close to recession? We were encouraged to see healthcare stocks outperform in August despite the higher-yield environment and we believe three factors contributed to the sector's positive relative performance. First, a continuation of the rotation away from AI-driven sectors, especially in the early part of the month; second, a Q2 earnings season that was generally strong for healthcare companies; and third, excitement generated by the announcement that a personalised cancer 'vaccine', intismeran autogene, developed by Moderna and Merck & Co*, delivered encouraging Phase 3 (i.e. late-stage clinical trial) results in combination with Keytruda in the adjuvant melanoma indication – patients whose melanoma has been removed surgically and who then initiate therapy to reduce the risk of recurrence. The news added over $80bn in market capitalisation between the two companies involved. It also had a favourable halo effect not just on biopharma companies but also those that benefit indirectly such as life sciences tools and services.