Worldwide Healthcare Trust annual results: the ii analyst view

interactive investor comments on the investment trust's figures.

Worldwide Healthcare (LSE:WWH) trust’s NAV fell by 5.8% over the year to end March 2022 against its benchmark, the MSCI World Health Care Index, which gained 20.4%.

The trust’s share price dipped by 10.8% over the same period, widening the trading discount to 5.5% at the end of March 2022.

On a positive note, the trust’s dividend per share rose by 4.5p to 26.5p at the end of March 2022 - up from 22p in the previous financial year.

In his comments on the trust’s annual results, Sir Martin Smith, chair of Worldwide Healthcare Trust, said: “During the year, the company’s portfolio manager continued to pursue a strategy of being underweight in large pharmaceutical companies and overweight in both emerging markets and emerging biotechnology companies; an approach which had served the company well during the previous year but was the principal reason for the company’s relative underperformance during the year under review.

“[…]The long-term performance of the company, however, continues to be strong, and it should be noted that from the company’s inception in 1995 to 31 March 2022, the total return of the company’s net asset value per share has been +3,866.7%, equivalent to a compound annual return of +14.7%.”

interactive investor’s view

Tracy Zhao, Senior Fund Analyst, interactive investor, says: “The negative NAV return over the year, when set against the strong performance of the benchmark, is enough to make anyone wince. But there’s no question that patient long-term investors have been rewarded in this trust, and concentrated, high-conviction, specialist strategies are never going to be for the faint-hearted. What we do see in today’s results is a strong level of transparency, which may well sweeten the pill.

“Launched in April 1995, this is the largest investment trust in the AIC Biotechnology & Healthcare sector by a country mile, with total assets of £2.2 billion. The trust is one of the top 20 private investor holdings on ii’s platform and makes good use of some of the benefits of being an investment trust: it can invest up to 10% of the portfolio in unquoted investments.

“Managing a portfolio of biotech and pharmaceuticals stock requires expertise not only in investment but also in medicine, chemical and biotech and more. The trust has been in the safe hands of the capable team of OrbiMed, which was appointed to manage the company’s portfolio of investments since its inception. OrbiMed has more than 20 degree holders with MD and/or PhD credentials, healthcare industry veterans, and finance professionals with over 20 years' experience.

“The trust consists of around 80 holdings, which is highly concentrated in relation to its total asset. Performance volatility could be well expected, especially in the falling market, regardless of the perception of the defensiveness of the healthcare secto,r which currently weighs about 25% of the trust.

“Over a third of the trust is currently invested in pharmaceuticals. Markets have seen biopharmaceutical M&A ticking up since April, which may draw significant investor interest.

“Despite the disappointing short-term setbacks, the trust has suffered since the second half of 2021, but the long-term performance of the trust is stellar. That said, the current macro environment and style rotation, could see the trust continue to have bumpy rides in the near to short term. Since the year ended March 2022, the trust has adopted share buyback to narrow the trading discount.”