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Investment policy

Worldwide Healthcare Trust PLC (“the Company”) invests worldwide in the healthcare sector with the objective of achieving a high level of capital growth. With effect from 1 October 2010, the Company’s performance has been measured against the MSCI World Health Care Index (total return, sterling adjusted). Prior to this date, performance was measured against the Datastream World Pharmaceutical & Biotechnology Index (total return, sterling adjusted).

In order to achieve its investment objective, the Company invests in a diversified portfolio of shares in pharmaceutical, biotechnology and related companies in the healthcare sector. It uses gearing and derivative transactions to mitigate risk and also to enhance capital returns.

The investment manager, OrbiMed Capital LLC., (“OrbiMed”), uses ‘bottom-up’ fundamental research to provide the investment thesis for all positions. In addition to meeting frequently with industry executives and healthcare practitioners, OrbiMed attends many major medical conferences worldwide. Portfolio positions are discussed and selected during daily portfolio management meetings. OrbiMed invests with a worldwide perspective, selecting ideas from across all major geographical markets.

OrbiMed emphasises investments in companies with underappreciated products in the pipeline, high quality management teams and adequate financial resources. A disciplined portfolio construction process is utilised to ensure that the portfolio is focused on 50 to 60 ‘high conviction’ positions. Finally, the portfolio is subject to a rigorous risk management process to moderate portfolio volatility.

The Board seeks to manage the Company’s risk by imposing various investment limits and restrictions:

  • The Company will not invest more than 10% of its gross assets in other listed investment companies (including listed investment trusts);
  • The Company will not invest more than 15% of the portfolio in any one individual stock at the time of acquisition;
  • At least 60% of the portfolio will normally be invested in larger companies (i.e. with a market capitalisation of at least US$5bn);
  • At least 20% of the portfolio will normally be invested in smaller companies (i.e. with a market capitalisation of less than US$5bn);
  • Investment in unquoted securities will not exceed 10% of the portfolio at the time of acquisition;
  • A maximum of 5% of the portfolio, at the time of acquisition, may be invested in each of debt instruments, convertibles and royalty bonds issued by pharmaceutical and biotechnology companies;
  • A maximum of 15% of the portfolio, at the time of acquisition, may be invested in companies in each of the following sections: – healthcare equipment – healthcare technology – providers of healthcare and related services
  • The Company’s gearing policy is to borrow up to the lower of £70m or 20% of the Company’s net asset value;
  • Derivative transactions can be used to mitigate risk and/or enhance capital returns and will be restricted to 5% of the portfolio;
  • Equity Swaps may be used in order to meet the Company’s investment objective of achieving a high level of capital growth and is restricted to 5% of the portfolio.