Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Bellevue Healthcare. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
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Overview

BB Healthcare Trust (BBH) is a differentiated trust within the AIC’s specialist Biotechnology & Healthcare sector. The managers invest in companies providing new approaches to what they view as fundamentally broken healthcare systems around the world.

As we discuss in the Portfolio section, the managers employ a highly active approach to stock-picking on a global basis. It’s a concentrated portfolio, holding a maximum of 35 stocks which are at times augmented by gearing (to a maximum of 20%). The managers are entirely benchmark-agnostic, therefore the current portfolio has high exposure to the US (94.4%) and no specific bias (in absolute terms) in terms of market capitalisation.

Returns since the December 2016 IPO have been strong, and are ahead of the trust’s twin objectives set at the time of launch. BBH has performed significantly ahead of the benchmark, delivering strong absolute returns and outperforming both its UK-listed healthcare peers over three years.

Discount volatility since launch has been muted, thanks to an annual redemption facility which allows investors to exit close to NAV at each year end (30 November). However, as we show in the Discount section, over the short term the discount can widen.

BBH seeks to achieve high total returns over the long term, whilst also paying a dividend to shareholders. The portfolio’s organic yield’s relatively low, but BBH has so far achieved a consistent dividend through paying it from capital at a rate of 3.5% of the year-end NAV. At the current price this equates to 4.1%. BBH is the only diversified healthcare trust with such a dividend policy, and its yield is thus materially higher than peers’. The board has said it’s committed to this high yield for the long term.

Analyst's View

BBH offers a compelling investment proposition, which we expect to benefit from long-term secular tailwinds. We think demographics and, more recently, the dire economic constraints governments around the world are likely to find themselves in make this trust a potential candidate for long-term investors seeking to achieve high total returns.

Having launched in late 2016, the trust doesn’t have a particularly long track record, although Bellevue Asset Management has more than 25 years’ experience of running a concentrated investment-trust strategy with its Swiss-listed BB Biotech vehicle. BBH has come out of the blocks fast, and has put in a strong performance so far. Being a ‘newbie’ also means that the trust has several shareholder-friendly, and in our view attractive, features: low discount volatility, high dividend security and transparent fees.

Ultimately however, the differentiated and focussed investment thesis as well as the highly active manner in which it is employed should be the main attractions for investors. The NAV has a slightly higher volatility than peers, but as we show in the Performance section, the Sharpe ratio suggests that the managers are using this extra risk well. On the other hand, discount volatility is likely to be minimised by the annual redemption option.

In conclusion, BBH is not the cheapest in its sector, but in our view is very much worthy of consideration for investors wanting a differentiated high-growth exposure to what we view as a secular-growth story.

BULL BEAR
Highly active approach and focussed investment thesis Limited track record of manager prior to launching trust
Good track record so far Dividend based on NAV, which means it will likely fall if NAV also falls year on year
Attractive dividend (albeit paid from capital) Gearing and the concentrated portfolio can mean potentially high volatility in NAV
Continue to Portfolio

Fund History

28 Mar 2024 Healthcare, UK valuations, and renewables
We take a look back at the final week of our ISA event…
21 Mar 2024 Fund Analysis
BBH could be poised for strong performance as the rate cycle eases…
20 Mar 2024 How to grow old gracefully (and preferably rich)...
Ahead of the final week of our event, focused on retirement planning, we consider some of the complexities of portfolio construction…
05 Mar 2024 Results analysis: Bellevue Healthcare
Reviewing a tough financial year, but the last three months give grounds for optimism...
23 Feb 2024 An underrated edge
Company meetings give managers a level of access that is difficult for individual investors to obtain…
20 Feb 2024 Waiting for the world to change
Closed-ended trusts are a simple way to access the attractive income and defensive potential of renewables infrastructure…
25 Mar 2024 Bellevue Healthcare
Paul Major
Rewatch this webinar as part of our month-long online series 'Themes for your ISA in 2024' hosted by the team at Kepler Trust Intelligence throughout March...
Watch Recording
26 Jan 2024 Heading to the polls
We look at elections around the world and what they mean for investors…
03 Jan 2024 Probably better asking an octopus
Our investment trust experts uncurl a tentacle each and choose their ‘top picks’ for 2024…
15 Dec 2023 Do obesity drugs have short legs?
BBH’s portfolio seems to offer stronger fundamentals than the hype elsewhere would suggest…
18 Oct 2023 Computer says no
Markets are fixated on replacing humans with AI, rather than maintaining them with biotech. Could this be an opportunity to rotate profits?
29 Sep 2023 Healthy fundamentals
Healthcare and biotech are out of favour despite the secular growth trends supporting them…
15 Sep 2023 Pizza Tiger
You don’t need to reinvent the wheel to deliver good returns on your investment...
23 Aug 2023 Halfway there…investing on a prayer
We provide an update on our picks for 2023 and see which analysts' prayers are being answered…
04 Aug 2023 Not going away
Macro volatility won’t change a key long-term driver for Bellevue Healthcare...
20 Jul 2023 Video interview with BBH Manager Paul Major on M&A, buy opportunities and more
We look at whether 2023 is still a 'historic opportunity' to invest in healthcare...
30 Jun 2023 Fund Analysis
BBH offers a very differentiated way to invest in the bombed-out healthcare sector…
05 May 2023 Is it time to buy healthcare?
Macro fears seem to have crimped valuations, despite the sector’s long-term growth prospects…
06 Mar 2023 Results analysis: Bellevue Healthcare
A rare discount may prove interesting to long-term investors in BBH…
20 Feb 2023 Podcast: Trust Issues #11 - Why healthcare valuations are low
We speak to Bellevue Healthcare manager Brett Darke about the state of the healthcare sector...
04 Jan 2023 Here we go again
We review our ‘top picks’ for what was a wild year and place our bets for the year ahead – which doesn’t look much calmer…
09 Dec 2022 Why healthcare stocks are here to stay
It’s been a volatile couple of years but that looks unlikely to stop tailwinds boosting the sector…
10 Nov 2022 Fund Analysis
BBH is resolutely aligned to the long-term growth tailwind of healthcare demand…
12 Jul 2022 Results analysis: Bellevue Healthcare
BBH’s managers appear resolute in their conviction, despite a challenging period for performance…
28 Jun 2022 Podcast: 2022's historic opportunities for healthcare investors
We speak to Paul Major, Portfolio Manager of Bellevue Healthcare...
14 Apr 2022 The inevitabilities: death and taxes
Biotech has had a rough ride lately but, as the world gets older and richer, our analysts think long-term secular growth is inevitable…
30 Mar 2022 You say tomato…
Do it yourself or put it into a global fund and leave it to the experts - our analyst debate the merits of each approach...
25 Mar 2022 Slides and Audio: BB Healthcare
Download the presentation and listen to the audio from our 'Ideas for your ISA' virtual Spring event on 17 March...
23 Mar 2022 Fifteen ideas for your ISA
Slides and audio from our event last week, featuring fund managers running money in every major market in the world...
07 Mar 2022 Fund Analysis
BBH’s discount has widened, and the managers' increased gearing shows their confidence in prospects…
01 Mar 2022 Results analysis: BB Healthcare
The team behind BBH are bullish on the long-term outlook and gearing up after big falls in share prices among healthcare stocks…
22 Feb 2022 Gearing up for recovery
The team at BB Healthcare think the continuing market rout for growth equities has created a fantastic opportunity for investors brave enough to weather the ongoing storm…
24 Dec 2021 Short term pain, long term gain
The team behind BB Healthcare Trust think the chaos being caused by the Omicron variant could create opportunities for long term investors…
10 Nov 2021 Fantastic growth funds (and where to find them)
We found them in India, Japan, frontier markets, healthcare and the global sector – and here they are…
10 Nov 2021 Slides and Audio: BB Healthcare
Download the presentation and listen to the audio from our 'Fantastic growth funds (and where to find them)' conference on 4 November...
01 Oct 2021 Things can only get better (and they will)
The team at BB Healthcare see brighter days ahead despite the best efforts of a sensationalist media to make it feel like doomsday…
09 Sep 2021 Fund Analysis
“Rarely better exposed to higher quality or more transformational science”...
30 Jun 2021 The long (and short) of future healthcare
We examine the implications of demographic change for investors...
07 Apr 2021 Paging Dr Alpha
The pandemic has boosted secular growth drivers behind healthcare as an investment theme...
10 Mar 2021 Spring Conference '21
Audio and presentations from 21 of the UK’s leading investment trust managers…
04 Mar 2021 Slides and Audio: BB Healthcare Trust
Download the presentation and listen to the audio from our 'Ideas for your ISA' Spring Conference on 03 March...
02 Mar 2021 Results analysis: BB Healthcare Trust
After another set of strong results, we look at how BBH has positioned itself for another year of outperformance…
10 Feb 2021 Fund Analysis
BBH is a potentially interesting addition to growth portfolios and for investors looking for income...
09 Jul 2020 The next big thing: two mega-trends that everyone should own
Tech seems to beat every other sector hands down – in both up and down markets – but nothing lasts forever. Where else should investors be looking for secular growth themes?
17 Jun 2020 Fund Analysis
BBH has a differentiated approach to a secular-growth theme...
View all

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