International Biotechnology: The top-performing specialist biotech trust

IBT is far and away the top performing specialist biotech trust…by Thomas McMahon

Overview

International Biotechnology Trust (IBT) has outperformed for four consecutive calendar years, first in two falling markets then in two rising markets. Since the start of 2024 it has delivered c. 27 percentage points of outperformance versus the biotechnology sector, and since the current managers took over in March 2021 it is far-and-away the best-performing biotechnology trust. IBT outperformed in the financial year ending 31/08/2025, with positive returns of 0.7% while the index was down 6%. It has then outperformed in a sharp rally, delivering 33% in the past three months while the index is up just 22%.

M&A has contributed significantly to the strong returns seen in 2025 and has been a constant factor behind the alpha delivered over the past few years. Managers Ailsa Craig and Marek Poszepczynski target companies with the features that typically lead to takeover approaches, and they note the scope for M&A to accelerate over the coming years as large-cap pharmaceutical companies seek to replace revenues that will be lost as a high number of important patents expire over the next few years.

Currently, Ailsa and Marek have positioned the portfolio with a bias to clinically de-risked companies with drugs that have passed phase 3 trials. They see the scope for these to either be taken out by large-caps or even to become commercial successes themselves. They argue these industry dynamics and the ongoing rate-cutting cycle are creating a positive environment for their industry.

Despite good performance and an active buyback programme, IBT’s shares trade on a c. 10.5% Discount at the time of writing. The trust pays a Dividend from capital, equal to 4% of the previous year-end NAV.
 

Analyst’s View

Not much more could be asked for from an active manager than what Ailsa and Marek have achieved since March 2021 when they took over as co-lead fund managers. Outperformance in falling markets and in rising markets, well-timed moves between market segments, stock selection validated by the acquisition of holdings at major premiums and the adept use of gearing contribute to a highly impressive picture. For good reason regulatory warnings state that past performance is not a guide to future performance, but we are encouraged by the basis of IBT’s success. Well-designed risk management procedures have allowed the trust to capture the upside from their positions and limited the downside. An understanding of industry dynamics and macroeconomic trends have seen the managers adjust their portfolio on expectations of the future rather than reactions to the past.

We think the outlook is extremely positive for biotechnology after a tough few years. The chief reason is lower US interest rates and the expectation of more rate cuts to come. Biotechnology has huge growth potential, and as investors have to increasingly look away from cash and bonds to get returns we expect there to be a wave of cash flowing through the riskier sectors, not much of which is needed to move the needle in biotechnology, which is a small industry in the context of global markets. We think the artificial intelligence trade has sucked in a lot of return-seeking cash over the past two years, and valuations in that market plus the need for a return on the massive sums spent on infrastructure should lead to a rebalancing into other potential sources of growth, like biotech.

Bull

• The top-performing trust in this space, with a track record of outperformance in rising and falling markets
• Falling interest rate and positive industry dynamics means the outlook for biotechnology is favourable
• Good access to biotechnology venture funds via the deal with Schroders Capital

Bear

• The industry is more volatile than wider equity indices
• Political interference in the sector can add to volatility
• Performance fees add to the charges payable and mean they can be high when performance is good

View the latest research note here > 

 

 
Disclaimer 
 
Disclosure – Non-Independent Marketing Communication 

This is a non-independent marketing communication commissioned by International Biotechnology. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research

The post International Biotechnology: The top-performing specialist biotech trust appeared first on USNewsRank.