Analysts and investors share their healthcare trust picks

After a painful period for investment trusts which back healthcare companies, could it be time to look for attractive opportunities in the beaten-up sector? 

Trusts in the Biotechnology & Healthcare have lost shareholders 15% on average over three years and trade at a mean 14% discount, according to the Association of Invesment Companies. 

As covered in Citywire’s recent look at the sector’s travails, with potential budget cuts to medical research in the US, controversial appointees to key government positions, and the threat of 200% tariffs on pharmaceutical products, sentiment since the start of the year has been turbulent. 

Confident in the fundamental strength and demand tailwinds for the sector, value investors have been eying up the opportunity.

So, which trusts stand out as potential winners? We asked analysts and fund managers. 

Worldwide Healthcare Trust (WWH )

The biggest trust in the sector is Worldwide Healthcare, run by Sven Borho and Trevor Polischuk. 

The £1.4bn trust has delivered a 6.6% shareholder total return so far this year, though its net asset value (NAV) is down 2.1%. As of Friday, the shares traded at a 6.6% discount.

Quilter’s Ewins favours WWH despite a tough run. ‘The trust had a very difficult 2022, given rising rates, and a negative return in 2023, as healthcare lagged the AI-driven tech rally. But performance is improving, and today’s discount offers an attractive entry point.’

Though the trust invests in the full spectrum of the sector, with top ten holdings in big pharmaceuticals like Eli Lilly and AstraZeneca, he highlighted its current overweight in biotech, medtech, and innovative pharma ‘where innovation is strongest’. 

‘Around 30% of the portfolio is in biotech versus 9% in the benchmark, including a dedicated basket of potential M&A targets,’ explained Ewins. 

Winterflood’s Shavar Halberstadt, also recommends WWH, calling it a ‘one-stop shop’ for investors wanting healthcare exposure without having to ‘fully commit to biotech.’

While China and biotech allocations have recently drawn losses, he said the trust is ‘in good hands’ with OrbiMed – ‘a highly recognised outfit’ – and that it ‘remains a strong long-term play.’

In July, the trust’s largest contribution came from emerging markets, as a number of high profile licensing deals were struck between Chineser biotech companies, such as Jiangsu Hengrui Pharmaceuticals, and Western multi-nationals, according to the latest factsheet. That helps justify the trust’s 13.5% allocation to China and Hong Kong.  

RTW Biotech Opportunities (RTW )

The share price of £366m RTW Biotech Opportunities is near flat in 2025 so far. After a strong August, the NAV is up 9.3% year to date in dollar terms. As of Friday, the discount remained wide at 22%, though that was before the latest portfolio valuation. 

Premier Miton’s Ian Rees, who recently switched his investment over from the Nasdaq Biotech index to a single holding in RTW explained why he thinks the discount is unjustified. 

‘They have a very credible manager with a strong track record in the US,’ he said. ‘But the private holdings are weighing on the share price. I see that as an opportunity — the market is effectively writing off that private capital at a steep discount.’

Winterflood’s Halberstadt also recommends RTW for more of a biotech-focused play, highlighting its ‘crossover model’ – investing in private companies just ahead of their initial public offerings (IPOs). 

‘If the IPO market reopens, RTW stands to benefit. They’ve also picked out M&A targets successfully in the past, so rising deal activity is another potential driver.’

Talking to Citywire recently, RTW manager Woody Stileman said: ‘We’re so frustrated by the discount, especially when we’ve got market-beating performance over longer time periods.’ 

He argued that sector consolidation, with Syncona (SYNC ) winding down and Bellevue Healthcare (BBH ) shrinking, could land his trust in a stronger position.

According to Stileman, the trust has recently found opportunities in a second generation of obesity assets. ‘Lilly and Novo won’t reign forever,’ he said.

The manager is also interested in neuropsychiatry, buying up shares in GH research on the back of promising data on the use of psilocybin – the hallucinogen in ‘magic mushrooms’ – to treat depression. 

Elsewhere, the trust has been developing alternative forms of financing such as its royalty fund – an RTW-created private fund aimed at generating returns from rights to royalty stream distributions from underlying assets. 

International Biotechnology Trust (IBT )

In terms of biotech, Winterflood also recommends the International Biotechnology Trust. Halberstadt noted: ‘They’ve been very good at picking out M&A targets – especially since one of their co-managers had a previous job in this area.’

The trust, trading on an 8.8% discount and now run by Schroders, is one of the better performers in its sector over most timeframes. The positive 16% return over three years is the best in the sector. 

BioPharma Credit (BPCR )

BioPharma Credit offers an alternative route to life sciences, through a portfolio of loans and other instruments backed by royalties or other cash flows derived from sales of medical products. 

The £758m trust, run by Pedro Gonzalez de Cosio, Pablo Legorreta and Martin Friedman, has seen its share price rise 9.4% year to date, and its NAV 8.1%. As of yesterday, its discount is 11%.  

As a debt rather than equity fund, it has also been volatile than other trusts mentioned in this piece. 

Winterflood’s Halberstadt noted: ‘If you’re more interested in the in the credit side than the equity side, then biopharma credit is a really interesting proposition – an option with an opposite catalyst. 

‘Credit is provided to healthcare companies at incredible rates, but they would usually much rather take out a very expensive loan that they’ll pay back when they IPO or get taken over than go public.’ 

Halberstadt added: ‘Valuation is already too low for a lot of these companies. Founders who have worked on something for decades would much rather pay quite a lot of interest for a short-term loan than give up or dilute their valuation. So, there’s quite a rich opportunity set there.’

He highlighted a stock specific issue that has recently dragged performance with Lumira Venture, but added: ‘It’s possible that they’ll still be able to break even on that.’ 

If they do, Halberstadt said: ‘The trust will be able to say they’ve deployed over $7bn in the biotech venture lending space without a default – which is quite extraordinary.’

He also noted an attractive yield of 7.7%. 

Citywire columnist James Carthew also wrote highly of BPCR today.