Worldwide Healthcare Trust (WWH) has reported a disappointing year to 31 March 2025, with a net asset value (NAV) total return of -10.3%, compared to a -3.2% return from its benchmark, the MSCI World Health Care Index (sterling adjusted). The trust’s share price fell by -11.2% over the same period, with the discount to NAV widening slightly to 12.4% (from 12.1%).
The underperformance marked a sharp reversal from the prior year’s strong +12.0% NAV total return. Despite achieving a record NAV high in August 2024, gains were wiped out in the final quarter of the financial year due to heightened macroeconomic uncertainty, escalating trade tensions following the US presidential election, and renewed political scrutiny of the healthcare sector. The managers noted that investor sentiment shifted sharply in early 2025, favouring defensive assets over the trust’s innovation-focused portfolio.
The last few years have been challenging for both the global healthcare sector and WWH, with the sector underperforming broader equity markets and the trust falling short of its benchmark on a five-year view. The board has acknowledged this underperformance and says it has engaged closely with the manager to scrutinise and reaffirm the investment strategy. While near-term macro and political headwinds persist, the board maintains its conviction in the long-term strength of healthcare fundamentals. It believes that, in time, innovation and demographic tailwinds will be properly reflected in sector valuations and portfolio returns.
Key contributors and detractors
Medical technology (Medtech) was the standout performer within the portfolio, led by Boston Scientific and Intuitive Surgical – both among the top five contributors to performance. Boston Scientific benefited from strong product demand and margin expansion, while Intuitive saw positive momentum around its next-generation surgical robot launch. Tenet Healthcare, Natera, and Argenx also contributed positively.
On the flip side, biopharmaceutical and biotech names dragged on returns. Notable detractors included Novo Nordisk, Biogen, and Apellis Pharmaceuticals, all impacted by regulatory headwinds and commercial setbacks. US services company Evolent Health also disappointed after revising earnings due to higher-than-expected oncology care costs.
Active buybacks and discount control
In line with its long-standing policy, WWH continued to be active in the market for its own shares, buying back 51.3m shares over the year (equivalent to 9.4% of the share capital at the start of the period) at an average discount of 10.8%, costing £176.5m. An additional 11.3m shares have been repurchased since year-end but, despite these actions, the discount remained wider than the board’s preferred level of 6%.
Dividends and revenue income
Reflecting a lower income profile and portfolio size due to buybacks, WWH’s net revenue fell from £19.7m to £16.1m. WWH’s board has proposed a final dividend of 1.7p (down from 2.1p), taking the full-year total to 2.4p per share (2024: 2.8p). Based on a 302p share price, this represents a yield of 0.8%. WWH’s primary focus remains on capital growth, and so dividends will vary depending on income generated and the trust’s tax status requirements.
Sector positioning and outlook
WWH says that it remains committed to its growth-oriented strategy, with a portfolio heavily skewed towards innovation. Biotechnology, for example, represented 29.6% of assets at year-end – well above the 9.0% weight in the benchmark – highlighting the managers’ conviction in the sector’s long-term prospects. Exposure to Medtech was increased during the year to 29.4%, reflecting both share price strength and the managers’ view that it remains more insulated from regulatory and geopolitical risks. Meanwhile, large-cap pharmaceuticals saw a reduction in weighting as conviction in certain names declined.
Private companies made up 6.1% of the portfolio, with no new unquoted investments during the year. However, two existing private holdings – Jiangxi Rimag and Visen Pharmaceuticals – successfully IPO’d in Hong Kong.
Navigating a shifting US policy landscape
WWH’s managers, OrbiMed, note that political volatility in the US, including the return of Donald Trump to the White House and the appointment of Robert F. Kennedy Jr. as Health Secretary, have created significant uncertainty. Concerns around drug pricing, tariffs on pharmaceutical imports, and vaccine policy have weighed on sentiment throughout the healthcare sector. Despite this, the managers remain optimistic. They believe many of the current policy threats will prove to be bluster or face legal and logistical challenges. Meanwhile, strong innovation, demographic tailwinds, and the accelerating role of AI in healthcare are expected to support long-term growth.
Long-term track record remains strong
Despite the difficult year, WWH’s long-term performance remains robust. WWH is now in its 30th year and, since its inception in 1995, the trust has delivered a NAV total return of +4,254%, equating to a compound annual return of 13.4%, compared to +2,354% (+11.3% CAGR) from its benchmark. The board has reaffirmed its confidence in OrbiMed’s strategy and expertise, and has ruled out any fundamental change to the investment approach. The portfolio remains diversified across therapeutics, services, Medtech and tools, with an emphasis on companies driving medical innovation globally.
WWH’s Board recognises shareholders frustration
Chair Doug McCutcheon acknowledged shareholder frustration but highlighted the trust’s ongoing commitment to delivering long-term capital growth. With a history of strong performance, a proactive approach to managing its discount, and a continued focus on cutting-edge healthcare investments, the board believes the trust is well-positioned to weather the current macro volatility and deliver for investors over the long term.
[QD comment MR: It’s been a tough year for Worldwide Healthcare, with the NAV underperforming its benchmark meaningfully and the discount remaining wide despite significant buybacks. Macro headwinds – particularly around US politics and tariffs – proved a major drag on sentiment, especially toward biotech and large-cap pharma. However, the long-term track record remains impressive, and the trust’s commitment to innovation-focused healthcare exposure gives it the potential to rebound when the sector regains favour. In the meantime, the active buyback policy and broad sector exposure offer some reassurance to investors willing to look through short-term volatility.]
