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Fund of the fortnight: Battle Against Cancer Investment Trust

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Written by:
14/10/2013
Every fortnight our research experts highlight a fund from their top-rated list.
Fund of the fortnight: Battle Against Cancer Investment Trust

The Battle Against Cancer Investment Trust (BACIT) is a way investors can support the fight against cancer through a genuinely attractive investment fund. The investment trust which is about to pass its first anniversary, is currently seeking an additional £100m of assets through a placing and offer via a C share issue which closes on 21 October.

BACIT was launched 12-months ago and currently has a market cap of £243m. It is the brainchild of Tom Henderson, formerly of Eden Capital, Moore Capital and Cazenove who invested $25m of his own money into the fund at launch. Over its first year BACIT has beaten its benchmark despite being only 82% invested on average (fund commitments in areas like infrastructure take time to be drawn on) delivering a 17.5% share price return with a 2% dividend yield and 9% NAV growth. BACIT has traded at an average premium to Net Asset Value of 5%.

The key elements of the BACIT are:

• It has an innovative “fund of fund” approach, investing in a diversified portfolio of circa 30 underlying funds, including hedge funds (54% of NAV), long-only funds and specialist, infrastructure, property and commodities funds. Equity funds cannot invest in tobacco companies.

• These are mostly funds that are not accessible for a retail investor and which are normally only available to very high net worth individuals or institutional investors. Many of these strategies will have limits on their size.

• The underlying funds have all agreed to waive their own fees to support the initiative, so investors benefit from the gross performance of some leading funds and managers who are supporting the venture. Many of these specialist funds would normally have base fees of up to 2% per annum and then a 20% performance fee.

• The managers of BACIT, who are significant personal investors in the fund, are not drawing any fees. Their return comes from their own investment in the fund. In the absence of any fees BACIT makes a 1% annual donation split 50:50 between the Institute of Cancer Research and via the BACIT Foundation a panel of charities from which investors can nominate a recipient. These include the likes of the Alzheimer’s Society, Beating Bowel Cancer, Marie Curie Cancer Care and the NSPCC and a number of others.

• Up to 1% of the BACIT portfolio may also be invested in the drug discovery and medical innovation unit at the Institute of Cancer Research and BACIT will have a royalty interest in proceeds generated by such drugs. BACIT has already invested to finance the development of a class of cancer drugs called CHK1.

The additional funds being raised will be used to utilise remaining capacity available in existing funds held and also to make new investments in around four new funds identified by the management team.

In view of the diversified nature of the fund, access to leading managers (including hedge funds) with their performance delivered gross of fees, the personal financial backing of the managers and support for important cancer research projects and charitable work, we think this is unique and highly attractive investment vehicle that also supports very worthwhile causes. Due to the high weighting to hedge funds, it should be less volatile than a traditional long-only global growth investment trust and a potential core holding in a portfolio or a “one stop” shop for a smaller investor.

 

Jason Hollands is managaing director at Bestinvest

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