This month kicks off the annual Breast Cancer Awareness campaign by Breast Cancer Care, an important initiative to promote better understanding of how many people are affected by cancer and the need to be vigilant to early signs. It is also a reminder of the important work that a number of charities do in providing support and care for cancer sufferers and also researching treatments into cancer.
We therefore want to highlight that there is a way investors can support the fight against cancer through a genuinely attractive investment fund which is about to pass its first anniversary and is currently seeking an additional £100 million of assets. The investment is called The Battle Against Cancer Investment Trust (BACIT) and it is currently looking to raise new 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 £243 million. Bestinvest has been supportive of the trust since launch and it holds a four-star rating from our research team. 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%.
How does BACIT work?
BACIT is an investment trust with an innovative "fund of funds” approach that provides access to funds most private investors would simply be unable to invest in directly. At the same time it avoids the high fees normally associated with such a fund of funds approach and when investing in hedge funds. For these reasons alone it is should be attractive, but additionally BACIT generates revenues for cancer research, charitable work and invests in the development of new drugs.
The key elements of the approach are:
- BACIT invests 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.
We are highly supportive of BACIT’s ethos and unique structure, which is the brainchild of Tom Henderson, formerly of Eden Capital, Moore Capital and Cazenove. Tom invested $25 million of his own money into the fund at launch, so his interests are very directly aligned with other shareholders.
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.
BACIT has a high quality Board of Directors which is chaired by Jeremy Tigue, the respected manager of the Foreign & Colonial Investment Trust, and includes a number of grandees from the world of hedge funds, asset management and private equity. A separate Strategic Advisory Committee comprises of respected investment professionals John Chatfeild-Roberts, Greg Coffey, Anne West and Chris Wood.
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.
Bestinvest clients who are interested in participating in the BACIT C-share issue should contact Ben Gilbert on 0207 184 7951.