International Biotechnology (IBT)

International Biotechnology (IBT) has been the stand-out performer in the biotech space over three-, five-, and ten-year periods, having outperformed in the tough years and in falling markets, and also outperformed the index in the sharp rally coming out of “liberation day” in April 2025. Managers Ailsa Craig and Marek Poszepczynski have been in charge for almost five years, and take a sophisticated, risk-conscious approach which has delivered impressive levels of alpha in rising and falling markets (see Performance).

Multiple pieces are falling into place for biotech, which has seen it rally sharply over the past six months. Interest rates are falling, political risk is subsiding, while growth investors are diversifying away from the expensive tech mega caps, as the AI trade in that space may have run its course. Ailsa and Marek highlight incredibly supportive industry dynamics which have been building for some time. Medical research is finding breakthroughs via multiple new technologies, just as large-cap pharmaceutical companies are desperate to replace drugs going off patent. M&A has been a big factor behind IBT’s excellent performance in recent years. Yet valuations continue to look attractive versus the sector’s history, even after the partial recovery so far, while balance sheets and funding positions look strong.

IBT is positioned in what the managers call ‘Biotech 2.0’ – late-stage, clinically derisked biotech companies which the managers think could be the mid and large caps of the future if large pharma companies don’t acquire them first (see Portfolio). A bias to small caps remains, as does a meaningful geared position of c. 8%, this having been reduced slightly post rally.

After narrowing late last year, the Discount has remained relatively narrow, at around 4.8% at the time of writing. The trust pays a Dividend from capital, equal to 4% of the previous year-end NAV.