Ian Cowie: this trust duo fight against humanity’s unseen enemies

Our columnist explains how the two healthcare trusts he owns in his ‘forever fund’ complement one another.  

News that the inventors of a Covid vaccine that saved millions of lives now say a cure for cancer could soon be found, would have hit the headlines in any ordinary week. But it is a sign of the strange times we are living through that this sensational prediction by professors Ugur Sahin and Ozlem Tureci got relegated to the inside pages.

This is important for investors because funding research to improve healthcare and medicine is one way we can make our money matter and do well by doing good. If that sounds pathetically Panglossian in a cynical age, when everyone seems to imagine they are experts on everything from epidemiology to the environment, then consider the real achievements of Sahin and Tureci.

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The couple founded the pharmaceutical research firm, BioNTech (NASDAQ:BNTX) in Mainz, Germany, in 2008. Originally, their main aim was to work on cancer. Then, as reports emerged from China about a new disease, they switched focus to find a vaccine for what became known as the coronavirus.

When the Wuhan epidemic grabbed a passport and became a global pandemic, Sahin and Tureci teamed up with the US pharmaceutical giant Pfizer (NYSE:PFE), and the rest, as they say, is hysteria. The next time someone asks you what good immigrants ever did, you might mention this couple - as they are both the children of Turkish immigrants to Germany.

Their great breakthrough came from examining how messenger ribonucleic acid - or mRNA - which is present in all living cells, can be manipulated to fight disease. Vaccines based on mRNA can reduce the risk of Covid causing fatalities and they can be tailored to fight individual illnesses, such as cancers.

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Never mind the theory, this small shareholder in Pfizer was particularly pleased to learn about Sahin and Tureci’s prediction on Monday because - like many others - some people dear to me have been afflicted by cancer.

Tureci said: “What we have developed over decades for cancer vaccine development has been the tailwind for developing the Covid-19 vaccine, and now the Covid-19 vaccine and our experience in developing it gives back to our cancer work.” She said that they had learnt how to manufacture vaccines better and faster.

When Sahin was asked when cancer vaccines might be widely available, he answered: “before 2030”.

Let me ‘fess up straightaway that mRNA and all the rest of it is double Dutch to me. But one of the great advantages of investment trusts is that they enable us to gain professionally managed exposure to specialist sectors where we might know next to nothing.

Worldwide Healthcare (LSE:WWH) is my oldest and biggest investment trust exposure to medicine, because I have been a shareholder here for more than a decade and - like Pfizer – it currently ranks among my top 10 stakes by value. Founded in 1995, this £2 billion global giant gives blue-chip exposure to familiar names in healthcare, such as its top three holdings AstraZeneca (LSE:AZN), Bristol-Myers Squibb Co (NYSE:BMY), and Roche Holding AG (SIX:ROG).

Sad to say, people are likely to continue suffering illness and want to be cured, regardless of the economy, so healthcare businesses can be regarded as offering some defence against the widely forecast imminent recession. However, Worldwide Healthcare Trust is no panacea; as can be seen from its total returns of 305% over the last decade; 28% over the last five years and shrinkage of nearly 10% over the last year.

While the latter loss is disappointing, it should be seen in the context of worse things happening elsewhere. For example, America’s technology index, the Nasdaq, has plunged by 33% so far this year, while the Yanks’ broader benchmark, the Standard & Poor’s 500, is down 23% over the same period. Meanwhile, oils and miners helped Britain’s FTSE 100 do less badly with a near 7% loss.

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International Biotechnology (LSE:IBT) is a more recent and more modest investment for my ‘forever fund’, where I paid 653p per share in April 2020, for stock that traded at only 643p this week. Its total returns over the last decade, five and one-year periods are 274%; 22% and -7%, according Morningstar.

Unlike Worldwide Healthcare Trust, which yields a measly 0.8% dividend income, International Biotechnology Trust yields 4.9%. Better still, it has increased shareholders’ income by an annual average of 6.4% over the last five years.

It is important to remember that dividends can be cancelled or cut without notice. But, if IBT maintained that rate of ascent, it would double its already decent yield in just over 11 years.

I hope IBT and WWH will be complementary; with the former offering exposure to earlier stage and smaller biotech pioneers plus income, while the latter focuses on more familiar healthcare blue-chips and capital growth. Either way, they both help to fund the fight against humanity’s unseen enemies, and this small shareholder is happy to play a microscopic part in that.

Finally, for the benefit of anti-vaxxers, here is what a recent report in The Lancet had to say about World Health Organisation (WHO) data: “Based on official reported Covid-19 deaths, we estimate that vaccinations prevented 14.4 million deaths from Covid-19 in 185 countries between December 2020, and December 2021. This rose to 19.8 million deaths from Covid-19 averted when we used excess deaths as an estimate of the true extent of the pandemic.”

On a purely personal level, I used to know a very vocal anti-vaxxer before he eventually caught the virus. He was a wise and kind man, plus a shrewd financial strategist, but I never did find out why he imagined he was an expert on epidemiology. Now I miss him greatly.

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 Trust (WWH) as part of a globally diversified portfolio of investment trusts and other shares.