Worldwide Healthcare to get shot in the arm

Worldwide Healthcare to benefit from RDR - Brierley

Alan Brierley, director at broker Canaccord Genuity, says he expects the £522 million specialist Worldwide Healthcare Trust to be one of the trust sector's big beneficiaries following the introduction of the Retail Distribution Review (RDR).

Post RDR, sentiment towards the investment trust sector has been positive, and many expect demand for specialist trusts to increase. The changes to financial regulations have meant the end of commission payments to advisers, "levelling the playing field" for open-ended funds and trusts.

Brierley rates the trust as a 'buy' and expects it will outperform its peer group in terms of shareholder total return over the next 12 months.

Worldwide Healthcare, managed by Samuel Isaly and Sven Borho, invests in the global healthcare sector, holding shares in pharmaceutical and biotechnology companies.

The managers expect the sector to continue to outperform broader markets over the long term, with their bullishness for the biotechnology sector "perhaps at an all-time high".

The trust currently holds 10% in emerging market countries directly and another 10% of indirect exposure to the sector through global players such as GlaxoSmithKline (GSK). Worldwide Healthcare also holds 64% in North America and 16% in Europe.

Isaly explains why getting a "foothold" in Asia is important for the trust in: Worldwide Healthcare Trust expects to gain from China exposure.

Brierley says: "Despite strong absolute and relative returns, there is little evidence of the excessive valuations typically associated with investment cycle peaks. Given strong earnings growth, valuations remain attractive in a historical context, notably in the biotech sector."

He adds: "We find the depth of resource impressive and as the evolution of the biotech industry gathers momentum, this gives Worldwide Healthcare a genuine competitive advantage."

Net asset value for the trust rose 2.1% on a total return basis in the three months to end of June. This compares with a 2.8% rise in its benchmark, the MSCI World Healthcare Index in sterling terms.

Over one year the trust returned 38.8% compared with 33.7% in the IT Biotechnology and Healthcare sector as at 14 August.