International Biotechnology Trust [LON:IBT] has delivered another year of robust performance, defying a volatile market backdrop to post a 3.5 per cent rise in total shareholder return for the 12 months to 31 August 2025 — a sharp contrast to the 6 per cent fall in the Nasdaq Biotechnology Index.
The trust’s net asset value (NAV) total return increased by 0.7 per cent, with a narrowing of the share price discount providing an added boost.
The results mark a continuation of IBT’s long-term record of outperformance, with the company’s NAV total return beating its benchmark over one, three, five and ten years. The outperformance came despite a tumultuous year for the sector, which saw the Nasdaq Biotechnology Index slump more than 22 per cent to a low in April before rebounding 25 per cent by year-end.
M&A resurgence drives recovery
The board noted that the year was marked by macroeconomic turbulence following “Liberation Day” and new global tariffs that initially weighed on sentiment. A recovery later took hold, fuelled by a revival in merger and acquisition activity as pharmaceutical giants sought to restock pipelines and adapt to the shifting regulatory environment.
Portfolio managers at Schroders, which oversees the trust, capitalised on this wave of consolidation. Among the highlights was Dutch gene therapy group uniQure, whose shares surged after receiving two key U.S. regulatory designations for its Huntington’s disease therapy, AMT-130. Following a sharp post-announcement rise, the managers crystallised gains by exiting the position.
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In October, IBT announced a new partnership with Schroders Capital to further expand its exposure to unlisted biotechnology opportunities across the U.S. and Europe. The trust’s initial £10 million commitment (about 4 per cent of assets) will allow it to access a broader range of venture and growth-stage investments.
Dividends, costs and shareholder alignment
The trust maintained its dividend policy of paying out 4 per cent of NAV annually, equating to a 4.7 per cent yield as of 31 August 2025. The board also secured a reduction in the management fee for the quoted portfolio from 0.70 per cent to 0.65 per cent, effective from September 2025, and amended the performance fee structure to ensure greater alignment between the manager’s incentives and shareholder returns.
During the year, 3.1 million shares were repurchased to help manage the discount, which narrowed from 11.3 per cent to 8.9 per cent, a sign, the board said, of “confidence in the underlying value of the portfolio.”
Outlook: scientific innovation and M&A to drive momentum
Looking ahead, the board remains upbeat, highlighting the combination of low sector valuations, strong balance sheets among major pharma players, and accelerating innovation — including the growing impact of artificial intelligence on drug discovery and clinical trials.
“The need for cash-rich pharmaceutical companies to sustain growth has fuelled a resurgence in biotech M&A,” the company said. “Coupled with advances in oncology, neuroscience and rare diseases, this backdrop provides a compelling environment for long-term investors.”
IBT’s board will ask shareholders to vote in favour of its continuation at the December AGM, confident that its active approach and specialist mandate leave it well-positioned to capitalise on what it describes as a “renewed golden era” for biotechnology investing.
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