Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by International Biotechnology. 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
IBT’s managers appear confident that valuations are increasingly attractive…
Overview

International Biotechnology (IBT) represents a specialist exposure to an area of the market that offers the prospect of strong capital growth, backed by numerous secular long-term trends.

The managers are true stock pickers, able to actively allocate capital within the universe, which they see as a huge advantage, particularly in the current market. The team observe that the larger cap companies which dominate the NASDAQ Biotechnology Index are likely to have stalling revenue growth over the next few years, implying that passive investors may be disappointed in terms of returns. IBT’s managers have increasingly been focussing on mid and small cap companies to benefit from what they see as the strong likelihood of a wave of M&A driving returns in this part of the sector.

In contrast to wider equity markets led by mega-cap technology stocks, the biotechnology sector has retrenched since early 2021. However, having fallen further in early 2022, the team have reacted by adding to gearing. As the managers commented in a recent blog, “We firmly believe the fundamentals of the sector remain very much intact… we at IBT are buckled in and ready for the ride”.

IBT pays a dividend from capital each year. At the current annual rate of 31.4p, the shares offer a prospective dividend yield of 4.9%. As such, IBT provides a very differentiated exposure for income investors. Over the past five years, IBT’s average discount to NAV has been 2.2%. The board has been buying shares back during March 2022, we estimate at a c. 6% discount to NAV. At the time of writing the shares trade on a discount of 5.8%.

Analyst's View

As we highlight in the Performance section, one of the noticeable features of IBT’s over the last five years is that it has achieved strong returns with considerably less volatility than its benchmark, the NBI. This is a result of a conscious effort by the team to deliver returns with lower volatility than the index, a result of their approach to diversifying risks, but also systematically to reduce active exposure to stocks ahead of scheduled trial results.

This has resulted in IBT’s NAV being less volatile and having a lower maximum drawdown than peers and the benchmark over the past five years, and IBT has also outperformed its peers over this period on a NAV basis. We see this as vindication for the team’s approach, proving that taking a higher risk approach doesn’t always result in the highest returns. A key aspect of IBT’s portfolio is its exposure to unquoted investments, which currently represent 9% of NAV (as at 28/02/2022). Unquoted investments will remain within a 5% to 15% guideline range set by the Board of Directors.

That gearing has increased markedly this year is in our view indicative of the high conviction that the managers currently have in the long-term investment opportunity presented by their portfolio. If they are right, the small and mid-cap exposure and level of gearing could set the trust up for a strong period of performance.

Bull

  • Strong and specialised team, with a unique approach to biotechnology investment
  • Offers the combination of a solid dividend yield and good prospects for capital growth
  • Risk-mitigating investment process has historically seen the trust deliver good performance, with lower volatility than the benchmark

Bear

  • Biotechnology sector is inherently more volatile than wider equity indices
  • Recent history illustrates short-term discount volatility can be high
  • Unlisted holdings are highly illiquid and, given their maturity, higher risk
Continue to Portfolio

Fund History

29 Apr 2022 Five trusts to diversify your portfolio income
Join us next week for one live webinar with a different manager every day of the week – including the chance to ask questions - focused on different solutions for those seeking a decent income…
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...
30 Mar 2022 A true all-rounder
IBT offers growth, income and diversification as well as a positive impact for society itself…
30 Mar 2022 Fund Analysis
IBT’s managers appear confident that valuations are increasingly attractive…
14 Feb 2022 Best foot forward
The team at International Biotechnology is optimistic that the consistent positive fundamentals in the sector will win through over nervous investor sentiment...
31 Jan 2022 Investing for income with investment trusts
How investment trusts can support your dividend goals…
20 Dec 2021 And now for something completely different
We take a look at a trust which could add significant diversification to income investors’ portfolios…
08 Dec 2021 Further cancer breakthroughs hinge on biotech investment
By Marek Poszepczynski and Ailsa Craig, co-investment managers of the International Biotechnology Trust...
05 Nov 2021 The right stuff
Biotechnology is a complex field and investors can face a wild ride during volatile periods – so a highly experienced management team is crucial to success…
13 Oct 2021 Fund Analysis
IBT remains differentiated to peers, offering exposure to the explosive potential of innovation in healthcare...
28 Jul 2021 How are the mighty fallen
Dividend culture as we knew it is dead, according to Kepler's David Johnson, but investment trusts offer a solution...
23 Jun 2021 A sensible source of alternative income
After dividends were slashed through 2020, the case for income investors to reconsider portfolio allocations and diversifying their sources of income is clear…
20 May 2021 Fund Analysis
IBT has had a change of management - but no change of strategy…
07 Apr 2021 Paging Dr Alpha
The pandemic has boosted secular growth drivers behind healthcare as an investment theme...
26 Mar 2021 Is biotechnology M&A the big opportunity post-vaccine?
After a vintage year in which healthcare stocks were at the forefront of addressing the coronavirus pandemic, a wave of M&A in the sector promises opportunities for investors…
10 Mar 2021 Spring Conference '21
Audio and presentations from 21 of the UK’s leading investment trust managers…
08 Mar 2021 Slides and Audio: International Biotechnology Trust
Download the presentation and listen to the audio from our 'Ideas for your ISA' Spring Conference on 03 March...
18 Feb 2021 A clear focus on returns
Sitting in one of the few sectors to be positively impacted by COVID-19, we look at IBT how it delivers consistently attractive total returns…
04 Jan 2021 Fund Analysis
IBT offers a differentiated way to access strong growth prospects at an undemanding valuation...
01 Oct 2020 Alternatives for Income Investors
Slides and audio from our event focused on alternative routes to a reliable income…
30 Sep 2020 Slides and Audio: International Biotechnology
View the presentation and listen to the audio from our 'Alternatives for Income Investors' event on 29 September...
26 Aug 2020 Trump v. Biden
Two of our analysts debate who will win the US election and what that means for markets…
21 Aug 2020 Income, growth, diversification: A compelling combination
This trust offers a blend of characteristics which might appeal to many investors...
20 Aug 2020 Alternatives for income investors
In a world where dividend are under unprecedented pressure, our income focused online event in September should provide serious food for thought…
06 Aug 2020 M&A and unlisted companies: Two powerful themes behind International Biotechnology Trust
The acquisition of smaller biotech companies by their larger counterparts has been a tailwind for investors in this high-octane sector...
20 Jul 2020 Biotech: The high stakes investment theme where expertise is everything
We meet the team of doctors and medical scientists behind International Biotechnology Trust...
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?
08 Jul 2020 Fund Analysis
IBT offers a differentiated exposure to a secular growth theme complemented by a solid yield…
25 Jun 2020 Selling the family silver
Is there something fishy about a trust paying dividends from capital?
13 May 2020 Harnessing the power of biotech for income and growth
30 Apr 2020 Results analysis: International Biotechnology Trust
International Biotechnology Trust (IBT) released its interim results this week, amid a rapidly changing landscape for the healthcare sector...
01 Apr 2020 The trends powering biotech for decades to come
At a time when healthcare is in the headlines, we take a look at the longer-term trends that are driving biotechnology innovation on a global scale...
16 Mar 2020 Investors put biotech under the microscope as Coronavirus bites
Advanced genetic technology has already helped accelerate progress toward a cure for the influenza pandemic...
27 Feb 2020 Robbing Peter to pay Paul?
Two of our analysts discuss the growing trend for companies to pay an income out of capital…
12 Dec 2019 Fund Analysis
A highly experienced management team and a flexible portfolio of quoted and unquoted biotechnology stocks, with a yield target of 4% of NAV...
29 May 2019 Fund Analysis
We discuss the opportunity as biotech stocks trade at record low valuations, despite strong prospects for the sector...
03 May 2019 A steady hand
Chairman of International Biotechnology Trust, John Aston, explains how his unusual background in both biotechnology and banking come together on the trust...
15 Apr 2019 Art meets science
Carl Harald Janson explains how his experiences in science and business blend seamlessly in his management of International Biotechnology Trust...
06 Feb 2019 Income for the long haul
With 'ISA season' looming we identify investment trusts which offer long-term, dependable income streams for yield-hungry investors...
31 Oct 2018 The Trump effect
Two years after the shock election of Donald Trump, we take a look at what the Trump administration has really meant for US markets and the trusts that invest in them...
10 Oct 2018 Fund Analysis
Five years on from the appointment of a new manager, this US-focused biotech trust has seen its fortunes transformed...
22 Aug 2018 Reassuringly expensive?
Some investment trust premiums have been stretched to eye-watering levels. Have investors been enjoying themselves in the sun too much? We try to rationalise current levels and suggest alternatives...
05 Apr 2018 The search for discounted yield
We scour the investment trust universe for trusts offering chunky yields on a discount...
04 Apr 2018 Fund Analysis
A well-resourced biotechnology fund that has produced annualised returns of +18% pa under the current manager, offering a yield of 4%...
19 Jan 2018 Full steam ahead?
Jupiter Fund of Investment Trusts manager Richard Curling gives his view on the potential risks and rewards for the major equity regions around the world in 2018...
20 Oct 2017 Finding income that doesn’t depend on the FTSE
We highlight a number of trusts and strategies which aren't correlated to an index that these days seems to be defying gravity...
27 Sep 2017 Not the usual suspects...
We highlight a selection of equity trusts that have managed to produce returns that are lowly correlated to global markets...
27 Sep 2017 Fund Analysis
A differentiated trust offering a yield of 4% drawn from the capital growth generated by a portfolio of US biotechnology companies...
29 Jun 2017 Brave new world
We find out how the outlook appears today to you, and ask the top managers in each sector, region and asset class where they see the opportunities in it...
23 May 2017 The doctor will see you now...
We meet Carl Harald Janson, once described by Bloomberg as the best biotech manager in the world, and learn more about his approach...
16 Mar 2017 Having your cake and eating it too?
We look into the new fad of trusts paying their dividends out of capital and analyse whether or not it really is a sustainable strategy...
28 Feb 2017 Don’t wanna be an American idiot…
After such a chaotic start to Donald Trump's presidency, we look at potential options for investors in the US equity space...
17 Nov 2016 Fortune favours the brave
Our analysis shows that in relative terms technology trusts have generated significantly better risk adjusted returns than their more broadly diversified global growth cousins...
17 Nov 2016 Fund Analysis
A growth-orientated investment trust with a differentiated approach towards the highly-innovative biotechnology sector...
View all

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