AXA WF Framlington Longevity Economy

Main changes to the portfolio during January We took profits in several medtech holdings after a period of strong performance. We used the proceeds to add to our position in Horizon Therapeutics and initiate a new position in Insmed, an inhaled medicines focused company developing therapeutics for rare lung diseases. Factors affecting performance during January The MSCI World Healthcare Index declined 1% during the month compared with a 0.2% decline in broader equity markets. The Fund outperformed its benchmark during the month, with positive performance derived from our biotech holdings Acceleron Pharma and Ultragenyx as well as the likes of Teladoc and Tandem Diabetes Care. Acceleron rallied over 70% during the period following the announcement of positive results for an early stage pipeline asset. Negative performance was driven primarily by our holding in Anthem which issued disappointing 2020 earnings guidance. Our underweight position in large-cap bellwethers such as J&J and Roche also detracted from performance. Current market influences and outlook Coronavirus and the global response to the health emergency are likely to negatively impact the global economy in the short term. Efforts to slow the spread of the virus, such as the closing of country borders and quarantines in affected areas will likely depress economic activity across multiple sectors. Indeed, several healthcare companies have already started to factor coronavirus-related headwinds into 2020 outlooks. We have seen increases in the stock prices of biopharma companies that have issued press releases stating they are working on a treatment for coronavirus. In our opinion, these moves are highly speculative. Drug development is a multi-year process and while attempts can be made to expedite development during global health emergencies, if the recent ebola outbreak in Africa is an example, treatments are unlikely to be successfully developed before the number of new cases of infection begin to decrease. That said, 2019 marked the second-highest year for US drug approvals since 2000, with the Food and Drug Administration approving a total of 48 drugs versus the record of 59 approvals set in 2018. This shows that despite all the political rhetoric around the cost of healthcare, drug development is experiencing a period of unprecedented success driven by advances in genomics and our understanding of disease biology. R&D pipelines continue to look strong, particularly among the small and mid-cap companies and we have observed positive R&D updates from the likes of Acceleron, Ultragenyx, and Insmed already year-to-date.