International Biotechnology Trust

The International Biotechnology Trust typically holds 90-120 companies, primarily on a bottom-up basis. The selection process includes evaluating the strength of a company's science, clinical trial data, intellectual property, commercial opportunity, management quality, financial position and valuation. A top-down overlay is also applied to reflect the biotechnology market cycle, helping to manage risk to make sure the portfolio remains appropriately diversified across therapeutic areas, company sizes and stages of development.

The result is a basket approach, designed to capture upside but spread risk across four specific baskets (rare diseases, oncology, metabolic and central nervous system). The team has a focus on late-stage high-growth companies which are at, or approaching, the launch phase.

The majority of the assets are invested in quoted companies listed on global stock exchanges, predominantly in the United States, which is home to the world's largest biotechnology market. Alongside listed equities, the trust also allocates approximately 5–15% of net assets to unquoted companies and specialist venture capital funds. These unquoted companies give managers access to earlier-stage innovations that may offer significant long-term growth potential

The International Biotechnology Trust is a specialist investment trust and carries a higher level of risk than a broadly diversified global equity fund. The principal risk is sector concentration, as the portfolio invests predominantly in biotechnology and life sciences companies whose share prices can be significantly affected by clinical trial results, regulatory approvals, patent developments and product launches. The trust also invests globally, meaning returns can be affected by currency movements, and its shares can trade at a premium or discount to their net asset value (NAV). In addition, a small proportion of the portfolio is invested in unquoted companies, which can be more difficult to value and sell.

The managers seek to reduce risk by diversifying across different areas of healthcare and companies at different stages of development, while maintaining a disciplined, risk-aware investment approach focused on capital preservation. Additionally, independent oversight is provided through Schroders' risk management framework and the board of directors also reviews risk management processes regularly.

The International Biotechnology Trust integrates ESG considerations into its investment process as part of its fundamental company research and risk assessment, rather than applying a strict ethical or exclusionary screening approach. The managers assess how ESG factors may affect a company's long-term prospects, including corporate governance, board quality, business ethics, clinical trial conduct, product safety, regulatory compliance and environmental management.

Given the trust's focus on biotechnology and life sciences, particular emphasis is placed on the social impact of investments, with portfolio companies developing innovative medicines and technologies that address unmet medical needs and improve patient outcomes. Engagement is aided by Schroders’ team of ESG and sustainability specialists, as well as their screening systems SustainEx and CONTEXT, which help evaluate/engage with companies on ESG issues.

IBT uses modest gearing to enhance long-term returns when the managers identify attractive investment opportunities. The board allows borrowing of up to 20% of net assets, although the trust has historically operated well below this limit. In practice, gearing has typically been maintained in the 5–10% range.

The International Biotechnology Trust has traded at an average discount of -8.2% to NAV over the past five years (figures to 20 July 2026). This reflects both the characteristics of the investment trust structure and investor sentiment towards the biotechnology sector. We think this persistent discount is due to a combination of structural and market-related reasons and not the underlying portfolio. These issues include the volatility associated with the biotechnology sector and exposure to smaller companies and unquoted investments.

To help manage the discount, the Board operates an active share buyback programme, purchasing shares when it believes this is in shareholders' interests and when market conditions permit.