After a brief rally during the market turmoil in August, healthcare stocks reverted back to their recent trend of underperforming the broader market. After benefiting from the markets' flight to quality in August, the large cap pharmaceutical stocks and healthcare providers were the weakest parts of the healthcare sector, whilst the higher beta bio-technology sub-sector performed strongest.The sector's relative weakness was driven by two factors: a return of risk appetite in the broader market and a refocus on healthcare fundamentals. As the market began to view the credit crisis as manageable, investors returned to risk trades and took short-term profits from the defensive healthcare sector.The fund's balanced position served it well during September. Its large cap pharmaceutical holdings gave back some of their August gains, but holdings in the smaller, faster growing bio-technology companies performed well as investors sought out differentiated stories with attractive drug pipelines and top-line growth. Our position in Australian blood and plasma company CSL, and bio-technology group MGI Pharma, both posted gains of over 15% for the month.
74.10p
