Transcript
Speaker: Hello and welcome to Uncovering Trusts a podcast by Edison Group. I'm your host, Liam O 'Byrne, and today I'm joined by Dr. Aaron Apkar, Director and Analyst covering Healthcare and Investment Companies at Edison. where we will discuss worldwide healthcare trusts or WWH. Aaron, thanks for joining us today.
Speaker: Thanks, Liam. Good to be here. Now... I understand there was an important update just a few days ago regarding... wwh's investment team so Aaron, perhaps we can start there. The Trust announced on 3rd of August that Trevor Polishchuk previously co -portfolio manager has become lead portfolio manager.
Speaker: Jeff Hsu has been appointed co -portfolio manager alongside him. whilst Sven Borja has stepped down as manager with immediate effect. Sven, who led WWH from its launch in 1995. has also said that he intends to step down as director of the trust in due course.
Speaker: writing after such a long period under Sven, how should investors think about continuity? So the change is significant because Sven's tenure spans the Trust's full history. However, it is an internal transition that's all been made.
Speaker: rather than a change of investment firm. Trevor already knows the portfolio and process well. Jeff joined Auburn Med in 2002. has been portfolio manager since 2005.
Speaker: and helps lead its public equity work in biotechnology and emerging markets. He also manages the Biotech Growth Trust portfolio. The same wider OrbiMed research platform remains in place.
Speaker: although investors should watch how responsibilities and portfolio positioning evolve under the new pairing. Okay, great. Now... We've discussed WWH on the podcast before but I guess as a general refresher and for those who may be listening for the first time.
Speaker: Could you maybe provide a brief overview of the trust and what it offers investors? Sure. WWH is a specialist investment trust seeking long -term capital growth from global healthcare care equities.
Speaker: Its benchmark is the MSCI World Healthcare care Index in sterling terms. The mandate is broad. It covers pharmaceuticals, biotechnology, medical equipment, healthcare services and life science tools.
Speaker: across large and smaller companies. It can also hold unquoted businesses and use gearing and derivatives, including equity swaps. That flexibility allows the managers to invest in established cash generative companies. as well as businesses whose value may depend on clinical, regulatory, or takeover the catalysts. Right, so with such a broad mandate.
Speaker: What kind of research power? I guess is backing that approach. Yeah, so... Albamed is a global healthcare specialist with around $20 billion dollars of assets under management and more than 150 professionals across three continents.
Speaker: More than 30 team members have medical or scientific doctorates. That matters in healthcare care where understanding trial design. disease biology and the probability of regulatory success can be important, and as important as analyzing a set of accounts. turning to performance then.
Speaker: Am I right in thinking it's been quite a... turnaround over the past year. Yes, WWH's financial year to 31st of March 26th was already a return to form. Its and NAV and share price total returns were 10 % and 13 .1%.
Speaker: compared with 1 .8 % for the benchmark. The improvement accelerated after the year end. In the 12 months to 30th of June, the NAV returned 30 .6 % and the shares 29 .9%.
Speaker: ahead of the benchmark's 20 .1%. June alone produced NAV and share price returns of 9 .6 % and 10 .2 % respectively versus 6 .7 % for the index.
Speaker: A key turning point actually came on 30th September 2025 when the Trump administration and Pfizer announced the first of 17 agreements with large biopharmaceutical companies.
Speaker: And Aubamec's view. These agreements gave the market greater near -term clarity on US drug pricing and tariffs. allowing company fundamentals to regain attention.
Speaker: In June 2026, there was also a broader rotation from technology and other recent winners into lagging sectors such as healthcare. care WWH benefited particularly from its biotechnology allocation and stock selection.
Speaker: Great. and How does the recent return to form sit alongside the Trust's longer term record? The very long term record remains strong. from launch in April 1995 to the end of the fiscal year 26.
Speaker: WWH. generated an annualized NAV total return of 13 .3%. compared with 11 % for the benchmark. But the medium term picture still warrants balance.
Speaker: at end june the five -year nav return was 11 .7 percent versus 31 .7 percent for the index That reflects the prolonged weakness in emerging biotechnology. and WWH's lower exposure to defensive large cap pharma during part of that period.
Speaker: Right, and and how does WWH's performance compare with its listed healthcare peers? So using data to 22nd of June when we did our last review, it's...
Speaker: NAV returns ranked fifth out of seven AIC biotechnology and healthcare funds over one, three and five years and fourth over 10 years. It's close this broad healthcare peer.
Speaker: Polar Capital Global Healthcare had a stronger three, five and ten year record. WWH was nevertheless the largest trust in the group by market value.
Speaker: and its 0 .9 % ongoing charge was among the lowest. The comparison reinforces the same message, really. a recent recovery and a strong record since launch.
Speaker: but weak and medium term relative performance. Okay, and then coming back. and focusing on the trust recent return to form. which holdings and strategies contributed most. So AstraZeneca was the largest positive contributor in fiscal year 26, helped by its broad portfolio and pipeline progress. M and &A was another major source of returns. Exact Sciences agreed to be acquired by Abbott at a premium of more than 35%.
Speaker: Ovidity Biosciences received an agreed bid from Novartis at a premium of more than 60%. and Apellis Pharmaceuticals was acquired by Biogen at a premium of around 140%.
Speaker: WWH's proprietary biotech M and &A basket returned 55 .9 % in sterling and added 5 .6 percentage points to FY26 performance.
Speaker: The managers counted 51 biotech deals during the year, with disclosed value of around $140 billion. dollars illustrating large farmers' appetites for external innovation ahead of patent expires. great and Where did the portfolio struggle?
Speaker: in the fiscal year 26. any detractors. Yes, so Boston Scientific was the largest detractor in fiscal year 26. as investors rotated away from highly valued medical technology stocks and became more cautious about its Farrah Pulse and Watchman products.
Speaker: Daichi Sanko and Vertex Pharmaceuticals also detracted. with Vertex subsequently sold after setbacks in its emerging Pain franchise. The managers reduced both Boston Scientific and the wider MedTech allocation again in June as analysts lowered 2026 sales expectations. Earlier on, you mentioned that WWH has the flexibility to invest in businesses whose value may depend on clinical or regulatory catalysts.
Speaker: is that perhaps and a recent example of this within the portfolio. Unicure is a good example there. In June, the company said it had reached alignment with the US FDA on filing requirements for AMT -130. It's gene therapy candidate for Huntington's disease, with a regulatory submission expected in the third quarter of 2026.
Speaker: The shares rose by about 80 % in local currency after the announcement. shows both the upside and the stock -specific risk that can come with innovation -led biotechnology investing.
Speaker: And what does the wider portfolio look like currently? at end june wwh had 48 holdings and net assets of about 1 .5 billion pounds Pharmaceuticals were 38 .2 % of economic exposure, biotechnology 19 .9 % and the biotech M and &A basket 11 .6%.
Speaker: In terms of geography, North America accounted for 69 .6 % and Europe 22 .2%. The largest positions were Eli Lilly, at 12 .2%.
Speaker: The M and &A basket at 11 .6 % and AstraZeneca at 6 .5%. the top 10 represented 53 of the portfolio compared with 60 a year earlier so quite close and but
Speaker: the concentration has come down a little bit. You touched before on the reduced med tech. allocation. have the managers been actively shifting that capital? capital across into pharma yes they Out of... to pharma as drug pricing and tariff risks became clearer while elevated medtech valuations looked more vulnerable.
Speaker: Even after that shift, Farmer was WWH's largest active underweight at end May, at 8 .6 percentage points below the benchmark. Biotechnology, including the M and &A basket, was its largest overweight.
Speaker: The portfolio therefore still favours innovation and company -specific growth over the most defensive parts of the sector. So Eli Lilly remains the Trust's largest position. Can you maybe say more about the attraction and why it's such a central holding?
Speaker: Sure. It is the t Trust's main exposure to GLP -1 medicines for diabetes and obesity. one of OrbiMed's most important structural themes. combined reported sales of to zepatide and semaglutide reached about 71 billion dollars in 2025.
Speaker: and the broader GLP -1 market is estimated to approach $100 billion dollars in annual sales from 2026. The next phase could be supported by international rollouts, oral formulations, new medical indications, wider reimbursement, different administration approaches.
Speaker: Eli Lilly was again WWH's largest contributor in June. while Structure Therapeutics, another obesity focused company, was second. Okay, great. and beyond GLP -1s.
Speaker: Where else are the managers finding opportunities? So oncology remains important, including... antibody drug conjugates, bispecific antibodies, radiopharmaceuticals and molecular diagnostics WWH also has exposure to molecular residual disease testing and AI -enabled tumor profiling, where diagnostics increasingly guide treatments.
Speaker: Natira and Garden Health contributed in June. More broadly, the managers see artificial intelligence as an enabling technology across diagnostics, drug discovery, and medical technology, rather than as a standalone portfolio theme. and how attractive is the healthcare care sector at the moment relative to the wider market? The sector's prolonged underperformance has improved starting valuation.
Speaker: At end May, the MSCI World Healthcare care Index traded on about 17 .1 times forward earnings, around a 13 % discount to the MSCI World Index.
Speaker: This sits alongside high levels of innovation and large farmers need to replace revenue lost due to patent expiries. Those factors support the case for further M and &A. However, Policy risk has not disappeared.
Speaker: Drug pricing, tariffs, changes in FDA leadership and the binary nature of clinical results can all create volatility. So turning back to WWAs. could you discuss the trust discount control policy and the role it plays for shareholders.
Speaker: The board aims to keep the share price discount to ex -income and NAV within 6 % during normal market conditions. The end June discount was 6 .9 % compared with 12 .5 % at end March 2025.
Speaker: In fiscal year 26 the trust repurchased 121 .1 million shares. or 24 .5 % of the opening share base. for £396 .3 million pounds at an average 7 % discount.
Speaker: Those repurchases added to NAV per share and dampened discount volatility, although they cannot guarantee that the discount will remain within 6 % when sentiment is weak.
Speaker: And what should investors know about income costs and gearing? WWH is primarily a capital growth vehicle, not an income fund. Its indicative yield was 0 .6 % at end June and the fiscal year 26 dividend was held at 2 .4 pence per share. The ongoing charge was 0 .9 % in FY26.
Speaker: Orbimed can also earn a performance fee for cumulative outperformance since launch. but none was accrued at the fiscal year 26 year end. gearing is used tactically although the trust can borrow up to 20 percent of net assets It had net cash of 2 .1 % at end June.
Speaker: Great. and Before we... wrap up for today, Aaron. How would you... summarise the investment case for Worldwide Healthcare care Trust. So WWH offers specialists access to a global sector where scientific expertise can create an informational advantage.
Speaker: It's focused on biotech. innovation and M and &A helped deliver a strong recovery through fiscal year 26 and into June. while healthcare valuations and the industry's patent cliff provide a supportive backdrop.
Speaker: Against that, the five -year relative record remains weaker. clinical and policy risks are material and the new management structure needs to establish its own record. The transition appears to preserve Orbamed's investment platform and Trevor's knowledge of the portfolio. But it is now an important point for investors to monitor.
Speaker: Brilliant. Thank you very much, Aaron. You've been listening to Uncovering Trust, a podcast by Edison Group. To find out more about WWH and other investment companies we cover, Please visit. W W dot. EdisonGroup .com.
Speaker: to
