The PGIM Jennison Health Sciences Fund faced a challenging start to 2025, experiencing a decline in value and underperforming its benchmark index during the first quarter. This detailed commentary provides a comprehensive analysis of the factors contributing to this performance, including market trends, sector-specific developments, and portfolio positioning.

Understanding the Q1 2025 Landscape

The first quarter of 2025 presented a unique set of conditions for the healthcare sector. Inflationary pressures, while easing slightly, continued to impact input costs and R&D expenses for many companies. Geopolitical uncertainties also added a layer of volatility, influencing investor sentiment and impacting stock valuations. Furthermore, evolving regulatory landscapes, particularly concerning drug pricing and approval processes, created headwinds for certain segments of the industry.

Performance Review & Key Contributors

The Fund's underperformance relative to its benchmark can be attributed to a combination of factors. Specific holdings within the biotechnology and pharmaceutical sectors faced headwinds due to clinical trial setbacks and regulatory delays. While the team actively manages risk, certain defensive positions within the portfolio did not provide the anticipated cushion against the market downturn. A deeper dive into individual security performance reveals the complexities of navigating this dynamic landscape. We'll outline key contributors to both positive and negative performance in this commentary.

Portfolio Strategy and Adjustments

Despite the challenging environment, the investment team remains committed to a long-term, research-driven approach. Throughout Q1 2025, we actively evaluated the portfolio, making strategic adjustments to capitalize on emerging opportunities and mitigate risks. These adjustments included:

• Increased exposure to companies with strong fundamentals and robust pipelines: We identified and added positions in companies demonstrating resilience and innovation.
• Selective trimming of positions facing regulatory uncertainty: We proactively reduced exposure to companies heavily reliant on approvals in a shifting regulatory environment.
• Focus on companies benefiting from long-term demographic trends: The aging global population continues to drive demand for healthcare services and innovative therapies, and we sought to capitalize on this trend.

Looking Ahead: Opportunities and Challenges

While the first quarter presented challenges, the long-term outlook for the healthcare sector remains positive. Technological advancements, personalized medicine, and an aging population are expected to fuel continued growth. However, navigating the evolving regulatory landscape and managing inflationary pressures will be crucial. The PGIM Jennison Health Sciences Fund team is focused on identifying companies best positioned to thrive in this environment. We believe our rigorous research process and disciplined approach will enable us to deliver long-term value to our investors.

Read the Full Commentary for a Detailed Analysis

This summary provides a high-level overview of the PGIM Jennison Health Sciences Fund's performance in Q1 2025. For a more in-depth analysis, including detailed security-level commentary and future outlook, please click here to read the full commentary.