Trust has Wellcome news for research
Thursday 22 December 2011
Medical pioneers and researchers are set to receive almost a third more cash from the country's largest health research charity, the Wellcome Trust, after it said it expects its investment arm to continue outperforming.
That should mean £3bn will be pumped into research projects over the next five years, up from the £2.3bn it gave in the past five years.
The trust left many of the world's biggest fund managers standing last year as it comfortably outperformed global stock markets.
Wellcome, which runs its £13.9bn fund in-house, produced a total return of 2 per cent in the year to September, while the MSCI World Index fell 3 per cent.
Danny Truell, the chief investment officer of the trust, said: "That performance was driven by our illiquid investments, particularly the venture capital area of our private equity portfolio which returned 17 per cent and our residential property holding, much of which is in central London and produced 16 per cent returns."
Wellcome is highly unusual in that 56 per cent of its funds are in areas like private equity, venture capital, hedge funds and property, which are generally recognised as illiquid investments.
The trust has only 40 per cent of its assets in shares and even then these are in just 31 "megacompanies" as Mr Truell describes them. This includes the likes of Microsoft, Nestlé and Marks & Spencer – companies, he describes as "sound, highly cash generative and so able to raise their dividends or buy back shares".
This part of the portfolio produced a negative return of 5 per cent in the last year. Hedge fund investments made a positive return of 5 per cent.
The trust began the year with £13.9bn of assets and after £602m of cash spending on charities ended the year with £13.6bn.
Mr Truell is cautious about the outlook for the coming year, but over the next five years expects significant improvement in cashflow, particularly if private equity realisations come to fruition.
Sir William Castell, the chairman of the Wellcome Trust, said: "These cash flows and the 24 per cent return that we have earned over the past five years should enable us to spend a projected amount in excess of £3bn on our charitable activities between 2011 and 2016."
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