Investors Chronicle includes Trust in top 100 funds

I am pleased to present International Biotechnology Trust’s factsheet for August 2019.

The end of August marks six years since I joined International Biotechnology Trust as Lead Investment Manager. Over this time period, the Trust has returned 168.7% (share price, total return) and 125.4% (net asset value, total return), equal to an annualised return of 17.9% and 14.5% respectively. I am pleased the investment community continues to recognise our outperformance of both the benchmark and our competitors. For example, the Trust was recently recognised in the Investors Chronicle’s Top 100 Funds: Investors Chronicle Top 100

So, with good historical performance behind us, what does the future hold? As I’ve said many times, it is difficult to predict future market direction and I will refrain from doing so. I will instead cite the investment bank Cowen; whose 2019 September Therapeutic Categories Outlook predicts that the worldwide biotherapeutics industry will deliver mid-single digit annual sales growth to 2024. One would therefore expect this to translate into even higher earnings growth. It seems, then, that the biotechnology sector is still in favourable waters with stable tailwinds.

That said, companies within the sector are certainly not over-valued. Far from it, in fact. Let me exemplify with our largest holding, Gilead, a company with a market cap of over $80bn, which currently makes up c. 7% of the Trust. Gilead’s main business is drugs for HIV. This business is stable, even though that is an unfortunate fact for many patients around the world. There is still no cure for HIV and it is not going away any time soon. As a result, Gilead’s predicted price/earnings ratio for 2020 is approx. 9.5 and EV/revenue in 2020 is 3.6. This profitability allows Gilead to pay a dividend of 3.8%. These ratios all compare favourably to the S&P 500 Index, whose predicted P/E multiple for 2020 is 16.5 (Source: Bloomberg).

Thank you for taking the time to read our factsheet.

August Factsheet (click link to open)