by Val Cipriani, Investors Chronicle, December 13, 2024:
A biotech bounce-back has pushed up share prices in the sector, but the UK trust options have barely captured those gains. Even the better performers are up 11-12 per cent this year, while their top holdings have recorded 30-100 per cent share price gains. The most precarious trust is Bellevue Healthcare (BBH), which has been left looking for a long-term rebound strategy after shareholders fought back against plans to scrap its annual exit option for investors.
Locking in shareholders would have gone against the grain, as over the past two years investment trusts have generally tried to combat discounts by offering investors better exit opportunities, for example through buybacks and tender offers.
Bellevue offers investors the option to redeem up to their entire capital every year near net asset value (NAV) level..
Numis analysts Ewan Lovett-Turner and Gavin Trodd said they were unsurprised that shareholders were “unimpressed” by the proposals..
However, some have argued that an annual redemption option is too frequent. James Carthew, head of investment companies at QuotedData, said: “My problem with [annual redemptions] is that they act as ‘cash machines’ for anyone looking to reduce their exposure to healthcare or even equities in general.”
..Carthew said he owns Worldwide Healthcare but wished he had bought Polar Capital, whose team “has done a better job of covering the sector as a whole”, which “worked in its favour when biotechs were struggling in an environment of higher interest rates”.
Read more here