Why is the Polar Capital Biotechnology Fund suddenly a best-seller?

The best-seller lists can often highlight some well-managed funds that might otherwise be overlooked and July was no exception. For the first time, the top ISA picks included Polar Capital Biotechnology Fund, which invests in cutting-edge medical innovation and has enjoyed a strong 18 months.

After a difficult few years, 2025 marked a turning point for the biotech sector, with a flurry of positive clinical announcements generating significant returns for the companies concerned. Sentiment was further boosted by the US Food and Drug Administration (FDA), the industry’s main regulator, that approved 46 new treatments during the calendar year.¹

These breakthroughs are important not only to patients, but also to large pharmaceutical companies, as they look to replace an estimated $300 billion in revenue from drugs whose patents are due to expire this decade. This is fuelling an increase in merger & acquisition (M&A) activity, with deals worth $65 billion in the first quarter alone², which is creating additional potential catalysts for investors to target.³

• Looking for personalised financial advice? Our advisory service can help you plan for your next step.

Objective and approach

The Polar Capital Biotechnology Fund aims to preserve capital and achieve long-term growth by investing throughout the biotech ecosystem, across geographies and market capitalisations. Lead manager David Pinniger has been at the helm since its launch in October 2013 and is supported by a team of seven other sector specialists.⁴

Pinniger looks to invest in cutting-edge medical innovation where he believes the market is underappreciating a company's potential to transform best practice. This could occur should one of its new drugs, devices or research tools be successfully developed and commercialised.⁵

The team specifically seeks to identify catalysts that could change the perceived value of an asset or technology platform. These can come in the form of clinical data, regulatory decisions, partnering deals between companies, or quarterly-reported sales of commercialised assets.⁶

What are the managers’ latest views?

Writing in the annual accounts in January, the management team said that the revenue and cashflow generation associated with new product cycles is strengthening the biotech industry towards self-sustainability. They described this as being characterised by durable, defensive growth that is independent of both financial markets and the broader economy.⁷

“We believe biotech continues to represent one of the most resilient and durable investment themes for investors. We remain excited about deploying investment capital behind the best people using the best technologies to develop the best new medicines to address the major challenges and opportunities of modern medicine.”⁸

• Get updates on markets, ISA funds, pension saving and much more

Portfolio

The fund holds a concentrated portfolio of 40 to 60 positions, with no benchmark or tracking error constraints. At the end of July, there were 47 holdings, with the top ten accounting for 38% of the assets, the best known of which was Amgen.⁹

Most of the fund (76%) was invested in biotech stocks, with 13% in pharmaceutical companies and the balance in cash. The holdings were mainly listed in the US, which is the epicentre of the industry, with large-cap businesses worth more than $5 billion making up 65% and the mid-caps a further 22%.¹⁰

Top 10 holdings

1. Amgen
2. Xenon Pharmaceuticals
3. Arcutis Biotherapeutics
4. Rhythm Pharmaceuticals
5. Argenx
6. Ascendis Pharma A/S
7. Enliven Therapeutics
8. Cogent Biosciences
9. Madrigal Pharmaceuticals
10. Cytokinetics

Source: Polar Capital Biotechnology Fund Factsheet, 31 July 2026

The portfolio is very different from its NASDAQ Biotechnology Net Total Return benchmark, as demonstrated by the active share of 74%. This is reflected in the fund’s historical performance, which has differed significantly from that of the index.¹¹

Performance, costs and risks

Since the launch in October 2013, the GBP Class I Distribution units have returned 848.0%, which is well ahead of the 274.2% generated by the benchmark.¹² Please note that past performance is not a reliable indicator of future results. The strong gains were partly due to the fact that, over the lifetime of the fund, 57 holdings have been the subject of successful bids from other companies.¹³

It has not all been plain sailing, however, with bumper years interspersed with more modest ones, and investors should expect more of the same.¹⁴ That is why such a volatile area should be seen as a long-term investment and only form a small part of a balanced portfolio.

The fund’s ongoing charges are 1.1% and the active approach is likely to add significant transaction costs.¹⁵ However, the high active returns have more than justified the fees.

• More on Polar Capital Biotechnology Fund

Source:

^1,3,7,8,13 Polar Capital Funds plc, annual accounts for the year ended 31.12.25
² PwC, Pharmaceutical and life sciences: U.S. Deals 2026 midyear outlook
^{4,9,10,11,12,14} Polar Capital Funds plc, Biotechnology Fund, Factsheet, 31.7.26
^5,6 Polar Capital Funds plc, Biotechnology Fund
¹⁵ Fidelity International, August 2026

Past performance is not a reliable indicator of future returns
Source: Polar Capital, total returns in GBP from 31.7.21 to 31.7.26. Excludes initial charge.

Got a burning question you want to ask? Why not drop us a line. Click here to ask your question.

• Read: Top 10 best-selling ISA and SIPP funds of 2026
• Read: 4 growth funds for your ISA
• Read: How to use Fidelity’s Investment Finder

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.