Bellevue Healthcare appoints Columbia Threadneedle as manager

After three years of lacklustre returns, Bellevue Healthcare has to hand over the reins to a new management team.

Bellevue Healthcare (BBH ) has named Columbia Threadneedle as its new manager, following a strategic review announced back in August. 

The £147m global healthcare trust will adopt the firm’s long-short ‘Seligman Healthcare Strategy’, which has returned 71% since it launched in July 2023. This compares with a 3% rise for the Russell 3000 Healthcare index and 15% for the S&P Biotechnology index.

The strategy will be managed by Kosta Kleyman, with the support of eight analysts. Kleyman has a doctorate in medical science and runs about $500m of healthcare assets across the CT alternatives business, according to broker Winterflood.

The board said the new approach aims to capture innovation while offering downside protection by shorting companies facing structural or clinical headwinds, recognising that 90% of drugs and biotech programs eventually fail. 

Under new management, the trust also hopes to gain scale, introducing regular month-end share issuances for investors seeking to access the strategy at above normal market size.

It will set aside the recently implemented zero discount policy and annual redemptions, which have led to significant shrinkage in recent years, replacing these with a quarterly exit opportunity capped at 15% of portfolio net asset value (NAV). 

The trust’s management fee will also change, to 0.95% of NAV per annum from 0.95% of market cap currently, which Winterflood analyst Shavar Halberstadt noted ‘goes against sector trends and may encounter shareholder resistance’ – particularly alongside the performance fee also to be introduced. 

Emphasising the depth of healthcare expertise at Columbia Threadneedle, incoming manager Kleyman said: ‘The [CT] team has advanced scientific and clinical expertise and is uniquely positioned to interpret data, anticipate inflection points and deliver consistent, uncorrelated returns.

‘We benefit from being based in the US, the world’s largest healthcare market and also the world’s largest capital market for healthcare companies. We are excited by the opportunity to bring our differentiated strategy to Bellevue Healthcare Trust shareholders.’

According to the announcement, the new team’s investment thesis is based on a ‘conviction that healthcare is one of the best sectors for alpha generation as it exhibits the widest dispersion between winners and losers of any industry’ – a long-short strategy can hopefully take advantage of that pronounced upside and downside. 

All changes are subject to shareholder approval at an upcoming general meeting, and, if accepted, the fund’s name will change to CT Healthcare Trust.

The loss of the mandate follows a poor run of performance but will be a blow to Bellevue Asset Management, which raised £150m to launch the trust in 2016. Having boasted £1bn of assets as recently as 2022, redemptions and buybacks now leave it with a tough fight to regain scale as a long-term vehicle.