International Biotechnology Trust – Beating the odds

Strategic positioning in mid-2018 helped International Biotechnology Trust (IBT) beat its benchmark over the past six months and close its discount to net asset value (NAV). This continued its outperformance of the US Nasdaq Biotechnology Index (NBI) over three and five years. Active management of the portfolio and an increased focus on larger mid-caps played out well in terms of IBT’s performance versus its peers.

IBT’s manager is maintaining its established policy of active risk mitigation, designed to avoid exposure to binary events that can cause large swings in the share price (typically the results of the Phase III trials that provide the final confirmation of safety and efficacy before the FDA approves a treatment for marketing). This should be seen as another attraction to investors in the trust. IBT’s shares have recently moved to trade at a premium to NAV and it has been issuing stock, expanding the fund.

Access to the fast-growing biotech sector

IBT is the longest-established of the London-listed funds specialising in the biotech/healthcare sector. It aims to achieve long-term capital growth by investing in biotechnology and other life sciences companies, and offers investors the highest yield in the sector while keeping its day-to-day running costs low. The portfolio is invested primarily in quoted companies, but IBT also has some exposure to unquoted companies.

wdt_ID Year ended Share price TR (%) NAV total return (%) NASDAQ Biotech Index TR (%) MSCI UK total return (%) MSCI World TR (%)
1 28/02/15 49.7 50.3 38.7 5.4 17.0
2 29/02/16 (14.1) (15.8) (16.1) (9.2) (1.3)
3 28/02/17 41.8 38.9 31.4 24.1 35.8
4 28/02/18 3.4 (4.4) (0.8) 3.1 6.0
5 28/02/19 10.0 8.1 8.6 2.1 4.0

IBT: International Biotechnology Trust – Beating the odds