Monthly commentary December: Tareno Healthcare Funds

Market overview healthcare sector

In December, the healthcare sector posted a return of -0.8%, lagging behind the global equity market, which rose by 0.8%. Pharmaceuticals was the only sub-sector with a positive performance and continued the rally that began at the start of the fourth quarter. The development was significantly supported by agreements between several large pharmaceutical companies, which promised price reductions in return for a temporary exemption from potential pharmaceutical tariffs, subject to additional investment in US production.

Further positive impetus came from the approval of Novo Nordisk’s Wegovy oral contraceptive pill and increased rotation into defensive sectors. On the other hand, cautious company outlooks, particularly from Pfizer, which revived discussions about patent expiries and future growth prospects, had a dampening effect.

Interest in M&A activities in the biopharma sector remained high, while the biotechnology sector took a breather after a strong performance over eleven months. Regulatory developments at the FDA and CDC led to increased volatility, particularly in biotech and life sciences & tools stocks. Political uncertainties continued to weigh on providers, services and managed care companies. The month was also characterized by a significant upturn in IPO activity in the healthcare sector.

Tareno Sustainable Healthcare Fund

Portfolio changes

A new position in Alcon was established in December. At the same time, the positions in Coloplast and Sonova were sold.

Performance Review

The biggest positive attribution drivers to the index were Roche, supported by a broker upgrade and Genentech’s agreement with the US government, as well as Bachem and Vertex following positive broker comments.

EssilorLuxottica had a negative impact following competition-related announcements, while Cencora as a result of profit-taking by pharmaceutical distributors and Bristol-Myers Squibb as an uninvested position weighed on relative performance.

ESG

The companies in the Tareno Sustainable Healthcare Fund portfolio did not report any significant ESG-related incidents in December.

Tareno Impact Healthcare Fund

Portfolio changes

No new positions were established and no existing positions were sold in the month under review.

Performance Review

The largest positive performance contributions came from Axsome, supported by regulatory progress on AXS-05, Aspen following the sale of Aspen APAC and Penumbra following a broker upgrade.

On the negative side, performance was negatively impacted by RadNet following a short report and increased competitive volatility, Hypera without company-specific impetus and Inspire due to regulatory uncertainties in the billing environment.

ESG

The companies represented in the Tareno Impact Healthcare Fund portfolio did not report any material ESG-relevant incidents in December.