‘Covid vaccine makers are overhyped – we sold up’

Veteran investor Sven Borho tells Sam Benstead why he has never been so excited about healthcare firms despite 30 years in the game

The innovation happening in healthcare today makes breakthroughs in traditional technology sectors look pedestrian. Rather than simply speeding up existing technology or adding new gadgets to phones, healthcare companies are delivering world-firsts in vaccine development, cancer diagnostics and even cancer cures that will allow us to live longer and happier lives.

Sven Borho, manager of the £2.6bn Worldwide Healthcare Trust, leads a team of more than 100 healthcare specialists in the hunt for the most important healthcare stocks on the planet.

The trust, which he has managed since its 1995 launch, has made investors about 45 times their initial stake, equivalent to returns of 16pc a year.

Mr Borho tells Telegraph Money how he has managed to deliver such impressive returns over a long period of time and what the next winning companies are.

WHO IS THE FUND FOR? This is a one-stop shop for investors who want to own the best healthcare firms on the planet. We cover the entire sector, from medical devices and surgical robots to biotechnology and the world’s biggest pharmaceutical companies. We can even invest in private companies and those in emerging markets, such as India and China.

We are a specialist healthcare investment manager. It’s all we do and the scale of our research and investment experience mean that we are never surprised by new breakthroughs – and there are a lot happening at the moment.

WHAT DO YOU LOOK FOR IN A STOCK? We want the fastest-growing and most innovative companies, so we look for firms that are on the cutting edge of their fields.

But we do not take unnecessary risks. When investing in smaller companies we want clear data pointing to successful outcomes in medical trials so that we maximise our chances of finding winners.

WHAT DO YOU AVOID? We do not want companies where all the good news is priced in, meaning that shares are overvalued. For example, Moderna has risen more than 2,000pc since 2020, but this is unjustified so we do not own it.

Both Moderna and the Pfizer/ BioNTech partnership, the early leaders in the use of mRNA technology, will lose their dominance. These firms do not have as much influence over vaccines as many think, as only a third of Covid jabs globally are made by those companies.

WHAT ARE THE MOST EXCITING AREAS AT THE MOMENT? Liquid biopsy, which is a blood test to check for and also analyse cancer cells. The holy grail of oncology is to diagnose cancer from a blood sample and we are getting very close to doing that. American firm Natera is one company that we own here.

However, AstraZeneca is the most important oncology firm in the world right now. It has a pipeline of new medicines focusing on some of the most difficult-to-treat cancers, such as blood, pancreatic and prostate cancers. Recent results for its Enhertu breast cancer drug were stunning. GlaxoSmithKline is the opposite. It is growing revenue very slowly and is not doing enough important research and development.

WAS CORONAVIRUS GOOD FOR THE FUND? It was, but we have now sold out of all companies related to Covid- 19 vaccine development as there is too much hype around them. Our top stock was CanSino Biologics, a Chinese vaccine company which went up tenfold.

The pandemic also showed how innovative companies can be – and that is exciting for the future of healthcare.

Another thing we learnt was that Chinese companies are very adept at applying American and European breakthroughs to their own medicines and then innovating further. They are becoming oncology leaders in their own right, and so we own some Chinese firms.

WHAT HAS BEEN YOUR BEST INVESTMENT? Natera has been fantastic for us. Since March 2020, when we invested, shares are up by three times. It has contributed 3.3pc of the fund’s performance since then. This is a lot given that we own around 90 stocks.

AND YOUR WORST? eHealth, an insurance company, has lost 72pc of its value since its March 2020 peak. It has been our worst stock this year, but it was previously one of the best – more than doubling in 2019.

WHAT WOULD YOU BE IF NOT AN INVESTOR? I would choose to go into water sports. I simply love everything to do with the beach – from kitesurfing to fishing.