International Biotech (IBT)

[bailey56]

Does anyone hold this IT? I have been considering it for a while now.

Like European Assets (EAT), every year it resets it's dividend to a percentage of it's NAV - 4% - although I think that this is a fairly recent move.

I'm interested as it is currently yielding more than Astrazeneca at around 3.5% which I have held for over a decade and has more or less held it's dividend over that time, although it has done well on capital growth.

I am now retired, and have moved more into income focused IT's whilst retaining some high-yielding shares. Rightly or wrongly I feel my income is a little more secure than holding everything in individual stocks. I'd welcome any thoughts.

Thanks

bailey

[monabri]

From SimplyWallStreet and Digital Look (as a 2nd check)

IBT appears to be loss making and the divi is not covered.


link to digital look for IBT

https://uk.webfg.com/equity/International_Biotech_Trust


Link to SimplyWallStreet - caution - might be paywalled.

https://simplywall.st/stocks/gb/diversi ... ust-shares

[UncleEbenezer]

That's an interesting definition of loss-making: https://www.theaic.co.uk/companydata/30218/performance

[PinkDalek]

That's an interesting definition of loss-making: https://www.theaic.co.uk/companydata/30218/performance

I couldn’t see where you were pointing but https://ibtplc.com/wp-content/uploads/2 ... m-2018.pdf suggests a loss in the interims of £20mio due to impairment etc.

[Urbandreamer]

Does anyone hold this IT? I have been considering it for a while now.
...
I am now retired, and have moved more into income focused IT's whilst retaining some high-yielding shares. Rightly or wrongly I feel my income is a little more secure than holding everything in individual stocks. I'd welcome any thoughts.

Thanks

bailey

I hold it and rate it. This area of investment does not historically provide income and most trusts were capital growth only. However IBT changed its articles to allow it to pay inestors from capital. The dividend almost certainly will never be covered.

Some see this as a drag on this fund and in theory it is. However some of us do want to combine income with the posibility of some growth.

I've owned it since 2016 and seen over 6% compound capital appreciation in addition to the dividends. The growth in NAV over that time is also reasuring.

[Lootman]

I hold it and rate it. This area of investment does not historically provide income and most trusts were capital growth only. However IBT changed its articles to allow it to pay investors from capital. The dividend almost certainly will never be covered.

Some see this as a drag on this fund and in theory it is. However some of us do want to combine income with the possibility of some growth.

But it's not really income, is it? It's drawdown. A better analogy would be that you sell 4% of your holding every year. The only difference is that you'd then have a CGT liability rather than an income tax liability.

Tax aside, you could duplicate the payout yourself, which is what I would prefer rather than have a payout, and tax event, mandated upon me whether I want one or not.

The last time I recall ITs trying to squeeze income out of assets that do not naturally pay an income was some of the split capital ITs, and that did not end well for many of them.

[Urbandreamer]

But it's not really income, is it? It's drawdown. A better analogy would be that you sell 4% of your holding every year. The only difference is that you'd then have a CGT liability rather than an income tax liability.

Tax aside, you could duplicate the payout yourself, which is what I would prefer rather than have a payout, and tax event, mandated upon me whether I want one or not.

The last time I recall ITs trying to squeeze income out of assets that do not naturally pay an income was some of the split capital ITs, and that did not end well for many of them.

Well it's income as far as spending it is concerned, though I accept your point that it's the same as drawdown.

Re CGT or income tax, I hold IBT in a SIPP, though I could of course hold in an ISA. Hence tax is the same regardless of which method of producing cash applies.

As long as IBT's NAV grows faster than the drawdown there shouldn't be a problem.
It's one of two trusts in that sector that MoneyObserver rates.

Still, you pays your money and makes your choice. I certainly don't argue that IBT is for everyone.

[bailey56]

Thanks to all for the feedback.

I'm not sure how well sites like Simply Wall Street are able to assess investment trusts, but I seem to recall that the last dividend did include a small amount from capital which was he first time that had happened.

The price has shot up about 10% since I added it to my watchlist, so I'm going to sit tight and do nothing for the time being.

Thanks again,

bailey

[Julian]

As long as IBT's NAV grows faster than the drawdown there shouldn't be a problem.
It's one of two trusts in that sector that MoneyObserver rates.

What's the second one that MoneyObserver rates?

- Julian

[Urbandreamer]

What's the second one that MoneyObserver rates?

- Julian

There are not many investment trusts in the lifecare/biotech sector.
The other rated one was Worldwide healthcare.

It is worth noting that 10 years ago there were only 3 trusts in the sector, compared to the 7 today.
I'm not sure how MoneyObserver rate IT's, but I would expect that past history does play a part.

Try this link and select periods and NAV/Price to form your own opinion.

http://citywire.co.uk/wealth_manager/in ... Period:60;