Ian Cowie: a new frontier for my investment trust portfolio

Our columnist is fleeing a scene of conflict – and investing in a sector specialist.

29th October 2026 11:34

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Call me a coward, if you like, but I am fleeing fighting in the Middle East and hoping part of my life savings might do more good closer to home.

Houthi and Iranian attacks on Saudi Arabia and the United Arab Emirates (UAE) - two top 10 country allocations in BlackRock Frontiers Ord (LSE:BRFI) investment trust - have forced me to sell up and seek a quieter, healthier life in London.

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That’s disappointing because it was only in September last year that I paid £1.70 per share for BRFI, hoping that peace might break out in the Straits of Hormuz and Bab al-Mandab.

This investor, whose preferred holding period is forever, hoped to enjoy capital growth and dividend income.

Sad to say, subsequent events dashed those daydreams. Now, even the US has ordered some of its embassy staff to leave Saudi Arabia, amid fears of worse violence to come.

So, to quote the economist John Maynard Keynes, who was also a keen DIY shareholder, “when the facts change, I change my mind”.

All things considered, I was pleasantly surprised to be able to sell my BRFI shares for £1.82 each earlier this month.

Along with two dividend payments from this trust, which is yielding 4.2%, that meant this brief Arabian adventure has been disappointing but not loss-making.

It’s also only fair to add that I continue to have exposure to Indonesia, which is BRFI’s fourth-biggest country allocation, via the palm oil producer M P Evans Group (LSE:MPE), where I paid £14.91 last March, as reported elsewhere at that time, for shares that currently trade at £18.40 on Thursday.

Better still, MPE yields 3.6% in dividend income that has soared by an annual average of 22% over the last five years.

My new holding

Returning to the world of investment trusts, selling BRFI raised sufficient cash for me to initiate a new holding in International Biotechnology Ord (LSE:IBT) trust.

This is the top-performing fund in the Association of Investment Companies (AIC) Biotechnology and Healthcare sector over the last decade and five-year periods, which currently ranks second in its sector over the last year.

To achieve those rankings, IBT delivered total returns of 193%, 81% and 27% respectively over the above periods.

It did so while yielding just over 3% dividend income, which has increased modestly by just under 2% per annum over the last five years, and its shares remains priced nearly 4% below its net asset value (NAV).

More importantly, in an under-reported aspect of the artificial intelligence (AI) boom, IBT could benefit from accelerating healthcare innovation, through more efficient drugs trials, to help solve real human problems.

Its underlying holdings are also becoming targets for bigger pharmaceutical companies refreshing their production pipelines, ahead of existing blockbuster treatments losing patent protection.

The fund managers, Ailsa Craig and Marek Poszepczynski, explained: “We have been saying for several years that a wave of dealmaking was coming, with a so-called ‘patent cliff’ looming for the large pharmaceutical companies that dominate global healthcare.

“More than $400 billion (£300 billion) of pharma revenues are at risk from patent expiries by 2030, and the pharma sector is poorly placed to replace them.

“Drug discovery among the large-cap pharma companies has become slower and more expensive over time, and pharma has retreated towards its real advantages – commercialisation and global distribution.

“Buying innovation from biotech, we have long believed, represents an obvious answer to pharma’s patent cliff problem.”

Bear in mind that more than 90% of new drugs that begin human clinical trials fail to make it to market, according to the US government’s National Library of Medicine.

But Craig and Poszepczynski, the former of whom recently appeared on interactive investor’s On the Money podcast, can point to specific examples where IBT’s capital has helped develop new treatments for serious illnesses.

They explained: “Pancreatic cancer has long been described as a graveyard for promising ideas.

“While other common cancers have benefited from chemotherapy-sparing options, pancreatic cancer has remained devastatingly resistant to progress – more than 10,000 people die of the disease each year in the UK alone.

“Against that history, Revolution Medicines has been developing Daraxonrasib as a targeted therapy for patients with pancreatic cancer. In April 2026, it announced positive data from its Phase 3 trial, showing a doubling of overall survival.

“Recognising the importance for patients of accessing the therapy, the US Food and Drug Administration (FDA) authorised the drug for its expanded access programme, allowing patients to be treated ahead of formal approval, and it was made available to more than 2,000 patients in the US. Full approval was granted in August 2026.”

Another sector name

Similarly, my long-term underperformer in this sector, Worldwide Healthcare Ord (LSE:WWH) is also investing in AI-enhanced trials to tackle various cancers.

This fund’s total returns over the usual three periods are 104%, 9.7% and 7.2% respectively, with negligible income of only 0.6%.

On a brighter note, Trevor Polischuk, who has been co-manager of WWH since 2015, said: “We see continued opportunities from immuno-oncology, antibody-drug conjugates, targeted therapies, radiopharmaceuticals and molecular diagnostics.

“WWH has notable exposure to companies using molecular residual disease testing and AI-enabled tumour profiling, where diagnostic information can influence treatment selection.

“Recent biotech breakthroughs across pancreatic cancer, breast cancer and other areas, illustrate the breadth of innovation outside the best-known large-cap franchises.

“We see structural drivers in healthcare from ageing populations, rising demand, increasing spend and accelerating discovery, with artificial intelligence becoming a broader enabling technology across diagnostics, drug development and medical technology.”

All the above might one day produce medical treatments that are much more useful than AI’s other applications, such as amusing videos about cats.

Biotechnology and healthcare funds enable investors to share the cost of professional stock selection, diminish risk by diversification and - possibly - do well by doing good.

Ian Cowie is a freelance contributor and not a direct employee of interactive investor.

Ian Cowie is a shareholder in International Biotechnology Trust (IBT) and Worldwide Healthcare (WWH) as part of a globally diversified portfolio of investment trusts and other shares. For more information see iancowie.co.uk

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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