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Worldwide Healthcare Trust - managers remain positive

Worldwide Healthcare Trust recently released its annual results to 31 March 2019. It didn’t perform as well as the broader global healthcare market over the year. We find out why in our latest update.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

  • The managers think the outlook for the healthcare sector is positive
  • NAV rose 13.7% compared with 21.1% for the trust's benchmark
  • Share price rose 14.3%
  • Total annual dividend of 26.5p per share, up from 17.5p last year

Worldwide Healthcare Trust is managed by an experienced, well-resourced team with the support of more than 80 investment professionals. They look for the most promising healthcare companies from across the globe. From early-stage companies with drugs going through pre-clinical trials, through to international biopharmaceutical giants.

The trust's focus on a single sector, combined with the managers' flexibility to invest in derivatives, emerging markets and smaller companies increases risk. They can also use gearing (borrowing to invest) of up to 20% of the trust's net assets. At the end of March 2019, gearing was 4.9%. The trust also carries a performance fee. You can find out more about the risks and charges in the trust's annual report and accounts.

We view this trust as a higher-risk investment that should usually form just a small part of a well-diversified, long-term investment portfolio.

How's the trust performed?

The trust's done well over the long term. An investment of £10,000 made at launch in 1995 would now be worth £318,673, but it's been through significant periods of volatility. Please note past performance is not a guide to the future.

Returns weren't as strong over the year to 31 March 2019 and the trust didn’t do as well as the broader global healthcare market. Investments in biotechnology, smaller and emerging markets companies held back returns, especially towards the end of 2018. The trust's lack of exposure to large pharmaceutical and healthcare companies, which tend to hold up better when markets are volatile, also held back returns.

Annual percentage growth
May 14 -
May 15
May 15 -
May 16
May 16 -
May 17
May 17 -
May 18
May 18 -
May 19
Worldwide Healthcare Trust 49.9% -7.3% 34.7% 10.6% -1.5%

Past performance is not a guide to the future. Source: Lipper IM to 31/05/2019

Nevro, which makes spinal cord stimulation devices for the treatment of chronic pain, was the worst performer. The company didn’t generate the level of sales expected by investors and its Vice President of Sales left the business. The company also lowered forecasts for future sales.

There were also a number of strong performers. Global healthcare company Merck did well when it announced the development of a new drug that helps treat certain types of lung cancer. Medical technology company Boston Scientific also performed well as it acquired a number of other businesses, which could boost long-term growth.

Managers' outlook

The healthcare sector's been volatile over the past year. Investors faced a cocktail of concerns from the trade war between the US and China to an increase in political rhetoric around drug pricing. But the managers remain positive in their outlook.

Innovation is coming through thick and fast and new treatment methods, such as gene therapy, have the potential to transform patient care and treat previously incurable diseases. Regulations have been simplified and clinical trial requirements are more flexible, making it easier to bring new drugs to market. The managers also think the industry could see a pick-up in merger and acquisition activity which has the potential to boost the trust's performance.

The managers feel the trust is invested to benefit from the exciting innovation that's taking place in the healthcare sector and long-term investors will be rewarded, although there are no guarantees.

Find out more about this trust, inc. charges

Worldwide Healthcare Trust Key Investor Information

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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