The Biotech Growth Trust | Winterflood Research

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A New Hope

Background: The Biotech Growth Trust* (BIOG) aims to deliver capital appreciation by investing in the global Biotechnology sector. Launched in 1997, the fund has been managed by Geoffrey Hsu of specialist investment adviser OrbiMed since May 2005, with Joshua Golomb appointed co-manager in 2023. We attended BIOG’s AGM presentation in July 2024.

Portfolio: The portfolio has a bias towards small cap, emerging Biotechnology companies. Typically, annualised turnover exceeds 90%, reflecting active management in light of ‘catalyst events’, such as clinical trials, impacting share price returns. As at 31 July 2024, the portfolio was predominantly invested in the US (86% of NAV), alongside Europe (8%) and China (7%). Whereas last year the majority of China exposure was unlisted (5.2% out of 10.0% as at 31 July 2023), just 0.1% of the current 6.6% China weighting is unlisted. The overall allocation to unlisted companies has fallen to 0.4% from 6.1% in July 2023.

Performance: Over the five years to 16 August 2024, the fund’s NAV total return (+24%) has lagged its benchmark, the NASDAQ Biotechnology Index (+41%), and the Biotechnology & Healthcare peer group average (+53%), as small caps and emerging Biotech underperformed more widely. Over the year to date, this has reversed, as the fund’s NAV total return (+13%) has exceeded its peers (+12%) and the benchmark (+8%).

*Denotes a corporate broking client of Winterflood Securities

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