Global Opportunities Trust (GOT), the £97m defensive global equities fund run by Dr Sandy Nairn at Goodhart Partners, made a 1.5% total investment return including its dividend in the first half of the year. Excluding the 10.3p per share final dividend paid in May, the portfolio’s net asset value (NAV) fell 1.1% to 397.3p per share, half-year results showed. With its flexible, go-anywhere investment approach, the trust does not have a formal benchmark but said this performance lagged the 12.9% rise in the FTSE All-World index but was ahead of the 0.8% gain in the Bloomberg Global Aggregate Bond index. At 30 June GOT held 14.6% in bonds and 19.1% in cash. Nairn and his investment team remained wary of the massive spending on artificial intelligence (AI) that has propelled stock markets to new highs. He said they were prepared to wait for opportunities and had bought shares in Diageo and AG Barr at lows during the period with 2.7% and 2.3% in the Guinness maker and fizzy drink group respectively.
Matthew Read, senior analyst at QuotedData, said: “Global Opportunities Trust is all about generating long-term absolute returns and it has a major focus on avoiding drawdowns. The 1.1% pre-income fall in the NAV is unwelcome, especially in an environment of rising markets, but the long-term trend remains intact. GOT’s high cash weighting is very much a consequence of the manager’s reluctance to chase highly valued areas of the market, particularly the AI-related winners that have driven much of the recent advance. It stands ready to exploit any setback. The c17% share price discount also provides a substantial margin for investors prepared to accept that returns may continue to lag while markets remain driven by AI until such times as valuations reassert themselves more broadly.”
BioPharma Credit (BPCR), the £1bn life sciences debt fund, has sold its indirect interest in Lumira Colombia, a Colombian distributor of third-party diagnostic products. This concludes the $419m investment made by the company and BioPharma Credit Investments V in the LumiraDx group in March 2021. The sale, combined with the disposal of LumiraDx’s point-of-care diagnostics platform business to Roche two years ago and the interest received from LumiraDx companies, means 10%-yielding BPCR has recovered around 101% of its principal investment.
QuotedData’s Matthew Read said: “In the end, Biopharma Credit has been able to achieve a much better outcome than investors once feared. LumiraDx was a troubled investment and the eventual recovery of 101% of principal, including interest received along the way, demonstrates both the value of being invested in debt – which sits further up the capital structure than equity – as well as BPCR’s managers ability to work through difficult situations. Obviously, the LumiraDX investment has not generated the return originally hoped for, and capital has been tied up for longer than intended, but getting the money back effectively intact is a creditable result under the circumstances. With the episode now drawing to a close, attention can return to the wider portfolio and the attractive yields available from new lending opportunities.”
NextEnergy Solar (NESF), the £283m renewables fund that put itself up for sale last month, has followed rivals in reporting the impact of lower power price forecasts in the second quarter. Net asset value (NAV) fell £16.7m in the three months to 30 June with the 2.5p quarterly dividend and 1.3p hit from a further reduction in forecast power prices the main factors in NAV per share declining 2.9p to 73.2p from 76.1p. Including £200m of preference shares, total gearing, or borrowing, rose to 52.1% of assets up from 51.2%. As previously announced, the company is in the advanced stages of its first asset disposal aimed at reducing borrowing to 40%-45%. At just over 49p, NESF stands on a 33% discount to the new NAV and yields around 8% after the company concluded its strategic review in March and said it would slash its dividend from 8.4p per share to 4p-4.6p. At the time it opted for a “strategic re-set”, rather than a value-destructive sale, but changed its mind after Bluefield Solar Income sold itself to Drax Group in June.
