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Fund Profile

International Biotechnology 18 March 2024

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
Ailsa Craig and Marek Poszepczynski are celebrating their first three years as managers of IBT…
Overview

Ailsa Craig and Marek Poszepczynski are celebrating three years as co-managers of International Biotechnology Trust (IBT), during which period the managers have outperformed the benchmark and both of their biotech investment trust peers. Much of the period has been a difficult one for the sector, but the risk management of the experienced pair has contributed to the good relative performance, along with strong returns as the market rallied late last year (see Performance).

Biotechnology is a rate-sensitive industry, and this, along with risk aversion in markets, meant that the sector languished in 2021 and 2022, and for much of 2023 too. However, the US rate cycle now decisively appears to have peaked, with rate cuts a matter of when, not if. A recognition of this seems to be behind the strong performance seen in Q4, and Ailsa and Marek argue that when rates moderate or are cut, biotechnology looks poised for a strong period of performance – as it has enjoyed in past rate-cutting cycles.

A surge in M&A late last year has increased their confidence that the cycle is turning in their favour, along with a sharp increase in equity financing into the sector in early 2024 and early signs of a burgeoning IPO market. Valuations, M&A and the macroeconomic outlook contributed to the managers making a well-timed move into small caps in Q4, and while they have taken some profits and allowed Gearing to fall, they maintain a positive outlook for the sector.

IBT remains on a 9% discount at the time of writing. The trust pays a Dividend from capital, equal to 4% of the previous year-end NAV.

Analyst's View

Biotechnology is a sector that has delivered outstanding returns in the past, with obvious secular tailwinds behind it: an aging population means more need for drugs to tackle disease, while rising scientific developments are spurring research and improvements in treatments. Until the last six months, recent years were disappointing as the sector went through a down-cycle, but in our view the outlook is much more promising. The rates environment is critical, as falling rates will lead to greater interest in growth areas. However, we think even just the abatement of fears of rate hikes and a severe recession should themselves be positive, as this would reduce risk aversion.

Ailsa and Marek had significant experience, including a combined 20 years on the management of IBT, before taking over as co-lead managers of IBT in 2021, and have delivered good performance since then. We think they have the expertise to continue to deliver in a specialised sector, with their new home at Schroders able to provide substantial resources. A key attraction of the managers’ approach is the efforts they put into risk mitigation and management. This includes how they diversify the portfolio by treatment area and by company and how they reduce stock-specific risk ahead of binary events. It is also seen in the tactical approach to gearing and portfolio construction that has seen them moderate the extra risk they took on late last year in early 2024. In our view this adds to the attractions of the trust as a long-term holding for investors who want access to this exciting but risky industry.

Bull

  • Strong and specialised team with a unique approach to investing in biotechnology sector
  • 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
  • Political interference in the sector can add to volatility
  • Gearing levels can be detrimental to performance
Continue to Portfolio

Fund History

22 Mar 2024 Trend setters
We take a look at four mega-trends to future-proof your portfolio…
18 Mar 2024 Fund Analysis
Ailsa Craig and Marek Poszepczynski are celebrating their first three years as managers of IBT…
13 Mar 2024 Roller coaster ride
Thematic funds have seen significant outflows over the past two years…
06 Mar 2024 Bouncing back to rude health
IBT is well-positioned to exploit the attractive valuations on offer in the biotech sector…
01 Mar 2024 Behind the trust: International Biotechnology Trust plc
Biotech companies stand to inject high returns and positive social impact into an investor’s portfolio and International Biotechnology Trust has an impressive track record of doing this with lower volatility than the index (NASDAQ Biotechnology Index), while paying a healthy dividend yield...
27 Feb 2024 Talking Trusts: An introduction to investing in biotech with International Biotechnology Trust
We talk about what IBT offers for investors looking for exposure to the biotech sector…
27 Feb 2024 Investing in biotechnology with investment trusts
How investment trusts can provide investors with access to the high-growth biotech sector…
19 Mar 2024 International Biotechnology Trust
Ailsa Craig & Marek Poszepczynski
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…
19 Jan 2024 Leading the pack
With a more positive outlook for the biotech sector, IBT has proved its credentials in picking the winners…
10 Nov 2023 Results analysis: International Biotechnology Trust
IBT has delivered strong outperformance in a tough environment...
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?
13 Oct 2023 Staying on course in a volatile sector
IBT's has delivered superior returns with lower volatility than the wider market...
29 Sep 2023 Healthy fundamentals
Healthcare and biotech are out of favour despite the secular growth trends supporting them…
28 Sep 2023 A biotech bounce back? With IBT Manager Ailsa Craig - Podcast: Trust Issues #22
We talk the move to Schroders, managing risk, and reinvesting the proceeds of M&A activity...
15 Sep 2023 Fund Analysis
IBT managers’ unique approach set to continue at Schroders…
03 Aug 2023 Flash Update: International Biotechnology Trust
IBT moves to Schroders, with no change to team or process and the prospect of lower costs over time…
01 Jun 2023 Time for a small dose of smaller companies
A recovering biotechnology sector points IBT to a growing opportunity in small caps…
03 May 2023 Results analysis: International Biotechnology Trust
IBT maintained its strong performance into the first half of its financial year…
21 Apr 2023 The hand that giveth
M&A deal flow in the UK is surging, which spells good and bad news for investors…
20 Mar 2023 The middle ground is not middle of the road in biotechnology
While the sell-off in tech has driven generalist investors into larger-cap biotechnology names, the managers of IBT have been focusing their attention on mid-caps…
10 Mar 2023 The first course: week one of our ISA event in review
We look at the first four presentations of our ISA season event…
09 Mar 2023 International Biotechnology Trust - Harnessing healthcare for growth and income
Ailsa Craig & Marek Poszepcynski
Rewatch this webinar from our month-long online series 'A feast of ideas for your ISA' hosted by the team at Kepler Trust Intelligence throughout March...
Watch Recording
15 Feb 2023 Flash Update: International Biotechnology Trust
IBT has flagged an upcoming change to its management arrangements…
20 Jan 2023 Podcast: Trust Issues #8 - Biotech investing in 2023 with IBT managers
Ailsa Craig and Marek Poszepczynski update us on goings on in the biotech industry...
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
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…
28 Dec 2022 Calling time
As the year draws to its close, our analysts highlight the articles they think are the team’s best calls from 2022…
02 Dec 2022 Have the engines started for the next mergers & acquisitions cycle?
Will the recent uptick in the share prices of mega-cap biotechs spread to the rest of the sector…
12 Oct 2022 Fund Analysis
Attractive valuations in a sector with strong long-term secular growth...
20 Jul 2022 Ingredients for success
We identify several less conventional trusts that offer strong sources of diversification to major indices…
31 May 2022 Five alternative trusts for income investors
Slides and audio from our event last week, featuring five trust managers discussing different strategies to deliver income for shareholders in challenging market conditions...
27 May 2022 Slides and Audio: International Biotechnology
Download the presentation and listen to the audio from our 'Alternatives for income investors' virtual week from 25 May...
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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