The Biotech Growth Trust is the best performing of the four health care investment trusts over one, three and five years. This has not gone unnoticed by investors and the fund has recently moved to a small premium to net asset value (NAV), in contrast to its 12 month average discount of 5.5 per cent. But quality is sometimes worth paying for and this trust has also beaten major healthcare indices such as its benchmark Nasdaq Biotech and MSCI World Health Care over these periods.
The trust mainly invests in emerging biotechnology companies based in North America. The trust's managers select companies according to their individual merits based on financial analysis, scientific review, frequent meetings with company management, and consultations with doctors and industry experts. They have a preference for biotechnology companies with strong management teams, innovative products in development, and sufficient financial resources to develop those products. Most of the emerging biotechnology companies tend of have a market cap of less than $3bn but are unprofitable at time of investment. They are typically focused on drug research and development, with their valuations driven by profitable developments, clinical trial results and partnerships.
When they invest in larger biotechnology companies they expect healthy organic growth from current products and deep pipelines to fuel future growth.
They usually sell investments when other investors start to value the newly profitable biotechnology company in excess of its anticipated future growth.
The trust has a performance fee of 16.5 per cent of any out performance over the benchmark. However, even with this its ongoing charge of 1.29 per cent is still reasonable for a specialist fund, especially in view of the strong out performance.
BIOTECH GROWTH TRUST (GB0000385517) | |||
| PRICE | 280.16p | GEARING | 107% |
| AIC SECTOR | Biotechnology & Healthcare | NAV | 285.16p |
| FUND TYPE | Investment trust | PRICE PREMIUM TO NAV | 0.74% |
| MARKET CAP | £178.43m | 1 YEAR PRICE PERFORMANCE | 48.12% |
| No OF HOLDINGS | 44* | 3 YEAR PRICE PERFORMANCE | 133.06% |
| SET UP DATE | 23-Jun-97 | 5 YEAR PRICEPERFORMANCE | 165.58% |
| ONGOING CHARGE | 1.29% | MORE DETAILS | www.biotechgt.com |
| YIELD | 0% | ||
Source: Morningstar, *Frostrow Capital.
Performance data as at 20 July 2012.
TOP TEN HOLDINGS as at 30 June 2012
| Gilead Sciences | 7.1 |
| Amgen | 6.4 |
| Questcor Pharmaceutical | 5 |
| Perrigo | 4.7 |
| Celgene | 4.5 |
| Onyx Pharmaceuticals | 4.3 |
| Auxilium Pharmaceuticals | 4.2 |
| Alexlon Pharmaceuticals | 4.1 |
| Incyte Genomic | 4 |
| Biogen Indec | 3.9 |
Geographic Breakdown
| North America | 87.6 |
| Continential Europe | 8.6 |
| Far East | 2.8 |
| Unquoted | 1 |
