Healthcare hedge fund Rhenman withstands “very volatile” month to remain in positive territory

Healthcare equipment

Rhenman & Partners Asset Management’s flagship healthcare-focused hedge fund overcame February’s market volatility to finish the month in positive territory, as the strategy triumphed in the Best Global Equity Fund category at this year’s Hedgeweek European Awards.

The Rhenman Healthcare Equity Long/Short fund – which trades a range of small, medium and large pharmaceuticals, biotechnology, medical technology and services stocks – added 0.57 per cent to its main euro-denominated IC1 share class during February. That brought its returns since the start of the year to 1.89 per cent. The strategy’s SEK class meanwhile rose 1.07 per cent last month, and is now up 3 per cent since the start of 2021.

Portfolio manager Susanna Urdmark said February had proved a “very volatile” month, starting strong and ending weaker as inflation concerns gripped markets, triggering a sell-off in the fund’s growth stocks and a rotation into more cyclical stocks.

“We actually had a positive contribution from our biotech companies during the month,” Urdmark said on a client webcast update this week, though its small and mid-cap growth stocks suffered.

The fund’s biggest gains came from positions in US pharma name Horizon Therapeutics, and biotech firm Nektar Therapeutics, a long-standing position in the portfolio. In contrast, the worst performers were Teladoc Health, a US virtual healthcare services provider, and Genmab, a Danish biotech company specializing in cancer therapies, which had earlier been among Rhenman’s best performing stocks in January.

“When you have sector rotation, there are a lot of things going on, and some short-selling is covered as people rotate. Also, Nektar is also having a lot of interesting milestones this year in terms of clinical data,” Henrik Rhenman, founding partner and chief investment officer, said of Nektar’s contribution.

Meanwhile, Kaspar Hållsten, portfolio manager, noted Teladoc slipped some 16 per cent in February having earlier surged 32 per cent in January.

Rhenman was victorious in the Best Global Equity Fund category at this year’s Hedgeweek European Awards this week, having advanced more than 46 per cent in USD, and 36.5 per cent in EUR, between 1 October 2019 and 30th September 2020.

Carl Grevelius, founding partner and head of investor relations at the Stockholm-based manager, said the strategy’s success largely stems from many years of close collaboration between its fund managers and the medical experts in its Scientific Advisory Board.

“Quite simply, this is the European championship in hedge fund management,” Grevelius said of the win.