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BB Healthcare Trust continues to deliver despite political uncertainty

The company's total returns have outperformed its benchmark

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The firm is run by the management team behind BB Biotech Investment Trust

BB Healthcare Trust PLC (LON:BBH) remains optimistic about the investment return opportunity in healthcare despite political uncertainty in the UK and the US.

The trust said Brexit worries in the UK and proposed drug price cuts in the US have created a volatile political environment but its share price and net asset value (NAV) have continued to "develop positively".

READ: BB Healthcare Trust expects stock-specific fundamentals to hold sway in the sector in the second half

In the first half, the company’s share price and NAV recorded total returns in sterling terms of 4.0% and 7.5% respectively. In comparison, the MSCI World Healthcare Index (in sterling terms) delivered a total return of 1.7%.

In the period since the trust was set up to 31 May 2018, the company's share price and NAV have delivered total returns in sterling terms of 25.3% and 26.0% respectively, versus a total return of 16.4% on the MSCI World Healthcare Index.

Ageing population supports demand

“In spite of the sector's lacklustre performance over the period, we remain very optimistic regarding the investment return opportunity in healthcare. Indices reflect history and incumbency, whereas the future belongs to those whose innovations will improve the quality and efficiency of healthcare delivery,” said chairman Professor Justin Stebbing.

“As society struggles to meet the growing needs of an ageing population, never has the need for improved services been so pressing. Our strategy focuses on companies helping to deliver that more efficient future.”

While there have been a number of shorter-term headwinds, BB Healthcare is focused on the longer-term outlook and companies it sees improving care at an acceptable cost.

Stebbing said valuations undemanding in a number of healthcare sub-sectors and the need for healthcare products and services will continue to grow into the foreseeable future.

He expects a pivot back toward stock-specific fundamentals in the second half of the year.

About BB Healthcare

The trust, as the name suggests, was set up to invest in the healthcare sector – both here in the UK and abroad.

It is run by the management team behind the hugely successful BB Biotech Investment Trust.

The fund has a cap of 35 companies in which it can invest at any one time and while it takes stakes in specific businesses, it does so to garner exposure to investment themes that are rigorously assessed to drive innovation and value.

Among its top 10 holdings as of July 31 this year were Anthem, Align Technology, Illumina and Shire. 

Shareholder returns

The company paid an interim dividend of 1.75p per share after paying a final dividend for 2017 of 3.5p. BB Healthcare has set a target for future dividends at 3.5% of net asset value.

The firm said its objective is to provide shareholders with “capital growth and income over the long term, through investment in listed or quoted global healthcare companies”.

The aim is to beat the total return of the MSCI World Healthcare Index (in sterling) on a rolling three-year basis and to generate a double-digit total shareholder return per year over the same rolling period. 

Quick facts: BB Healthcare Trust PLC

Price: 184.5 GBX

Market: LSE
Market Cap: £941.03 m

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