Edison issues review -The Biotech Growth Trust
London, UK, 16 December 2015
Edison issues research review on The Biotech Growth Trust
The Biotech Growth Trust (BIOG) invests worldwide in the innovative area of biotechnology, with the aim of achieving capital growth. Biotech has been one of the strongest-performing market sectors in recent years, but controversy over drug pricing in the US caused a sell-off in September, denting returns over shorter periods. BIOG's managers argue that truly innovative and effective new treatments will continue to have strong pricing power. The trust's investment approach is catalyst-driven, with specialist managers and analysts assessing the likelihood of clinical success and positioning the portfolio accordingly. This strategy has worked well in the long term but a small number of company-specific events has affected recent performance, and BIOG's discount is currently towards the wider end of historical ranges, with potential for rerating.
At 14 December BIOG's shares traded at a 6.3% discount to NAV. This is higher than the one-, three- and five-year averages (4.6%, 3.8% and 4.4% respectively), and compares with a 12-month high of 10.9% seen in early May. With a spell of recent underperformance versus the NASDAQ Biotech index having dented BIOG's track record, there is scope for a rerating in the shares should the previous trend of above-benchmark returns be re-established.
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