FrontPoint Clients Seek Healthcare Replacement

Chidem Kurdas

A number of large investors were in the FrontPoint healthcare fund  that has been shutting down after inside trading allegations surfaced against a portfolio manager. Some of the investors are funds of funds that want to have healthcare equity strategies in their portfolio.

Analysts see healthcare as an attractive place to be. The healthcare sector is cheap, says Barry Knapp, head of  US equity strategy and a managing director at Barclays Capital. It has come out of a 20-year decline but is the cheapest according to the valuation methodology used by his team. “It’s a good place to hide,” he said, at a conference.

That’s the view held by some former FrontPoint clients, who nevertheless tried to withdraw from the FrontPoint Healthcare Flagship Fund as soon as they could, in large  part because of fears that litigation around inside trading could cause assets to be frozen. Adverse publicity was also a concern.

The general investment strategy, however, remains attractive. So the investors are looking for specialist managers. Years of decline in the sector decimated healthcare funds, but there are some with reasonable track records.

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