Biotech Growth Trust (387p and 5.8% of JIC portfolio)
The Worldwide Healthcare Trust (1048p and 4.8% of JIC portfolio)
Nice piece in the Sunday Telegraph yesterday by Tom Stevenson, encapsulating why I have over 10% of the JIC portfolio in two investment trusts, The Biotech Growth Trust and The Worldwide Healthcare Trust.
The main gist of the article was that world healthcare spend was forecast to rise from $6trn in 2010 to $10trn by 2020. The main drivers of this growth are; first, an ageing population leading to a higher incidence of age-related diseases such as Alzheimer's and many forms of cancer; second, sedentary life styles fuelling growth in chronic diseases such as obesity and diabetes and last, increased spending on health in emerging markets as wealth and life expectancy increase.
On the same theme, last year I read Cracking the Code by Jim Mellon in which he makes a number of bold statements: “We are living in the Diamond Age of discovery”, “Our world stands on the brink of the greatest era of discovery and advance ever seen” and “it is no exaggeration to say that in the next 20 years we are likely to make greater progress in medicine than in all humankind’s prior years of cumulative practice”. In a sentence, his argument is that the recent sequencing of the human genome allied with the exponential growth in computing power will fuel the explosive development of the relatively new industry, life sciences.
By holding both the Worldwide Healthcare Trust which focuses on larger pharmaceutical and health care providers and The Biotech Growth Trust which invests in smaller biotechnology companies I hope I have all angles covered. Larger pharmaceutical companies with strong balance sheets should benefit from the growth in health expenditure whilst the smaller, but higher risk biotech companies should give higher returns. I like the Biotech Growth Trust as for a lay man it gives exposure to the theme without having to find your way through the minefield of trying to pick the winners from the losers!
I first bought Biotech Growth Trust last April and added in November with the return so far over 50% and I bought the holding in Worldwide Healthcare Trust last June with a return so far of 30%.
