Rhenman & Partners Asset Management, a Stockholm-based sector-specialist hedge fund firm, says 2020 is poised to be “a good year” for its flagship healthcare strategy, after it posted a double-digit return for the second month in a row.
Rhenman & Partners Asset Management, a Stockholm-based sector-specialist hedge fund firm, says 2020 is poised to be “a good year” for its flagship healthcare strategy, after it posted a double-digit return for the second month in a row.
The Rhenman Healthcare Equity Long/Short Fund – which trades small, medium and large pharmaceuticals, biotechnology, medical technology and service company stocks – gained 10.9 per cent last month in its main euro-denominated share class.
The rise, which followed a 17 per cent April advance, has reversed a disappointing start to 2020, when the fund suffered three consecutive down months in Q1, culminating in a near-15 per cent loss in March.
The strategy is now almost 3 per cent positive for the year.
“After a surprisingly strong recovery for the stock market in general and the healthcare sector in particular, we should be facing somewhat calmer developments going forward – perhaps with a minor correction after the strong run,” Rhenman said in a performance update on Thursday.
While healthcare grew in line with broader global equity markets last month, some sub-sectors performed better than others, with biotech stocks – where valuations hit five-year highs – enjoying particularly strong momentum and proving the fund’s biggest performance driver.
Key positions for Rhenman in May were US drug provider Horizon Therapeutics, which specialises in rare diseases, and MacroGenics, a biopharmaceutical manufacturer of cancer treatments.
Rhenman now expects further gains this year, with the June-July summer period and presidential election years traditionally yielding positive returns.
The sector-specialist hedge fund also pointed to “widespread enthusiasm” for further innovation within the sector, adding that post-US election drug reforms are not predicted to upset industry profitability.
“All in all, this represents a big difference in sentiment from previous years,” the update noted. “2020 is thus poised to be a good year for the fund.”
Developments within the healthcare industry are being closely watched this year amid continued hopes of an effective treatment for Covid-19.
In March, Henrik Rhenman, the firm’s founding partner and chief investment officer, said that while a coronavirus vaccine may be 12-18 months away, certain treatments such as antivirals, synthetic antibodies or plasma-based products could be available within six months following trials, with some existing treatments and therapies also possibly being used to combat the spread of Covid-19.
