Home > News > Asset Allocation > Wellcome Trust Saw 34.5% Returns for Fiscal Year 2020-2021. Here Was Its Strategy.

Asset AllocationJanuary 12, 2022

Wellcome Trust Saw 34.5% Returns for Fiscal Year 2020-2021. Here Was Its Strategy.

This is the British health care charity’s best-performing year in two decades.

British health care charity Wellcome Trust released its annual report yesterday, showing that the fund has achieved overall returns of 34.5% from October 1, 2020, to September 30, 2021. With assets under management (AUM) totaling more than £38.2 billion (US$52.3 billion), the trust is the wealthiest charitable foundation in the United Kingdom.

Just how did the fund achieve these stellar returns? For one, it had a couple of excellent stock picks, such as DoorDash, which has doubled in price since December. That stock alone helped Wellcome Trust achieve over $1.3 million in returns. DoorDash remains Wellcome Trust’s largest individual equity holding, followed by Microsoft and Alphabet.

But Wellcome Trust’s success isn’t just due to its public equity holdings. The most lucrative asset class for the foundation is private equity, which makes up 32% of the fund’s portfolio. This past year, private equity returned 72.6% for the fund, with venture funds returning an average of 79.6% and making up 18.2% of the total portfolio.

Public equities were less lucrative, but still returned 16.5% for the fund. They make up about 42% of the fund’s portfolio. Hedge funds, about 10% of the portfolio, returned 11.2%. Real estate assets, which make up only 7% of the portfolio, returned 16.1%.

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The fund keeps the final 9% of its portfolio in cash and bonds and uses approximately 6.7% in leverage. It currently has an AAA/Aaa credit rating.

The fund now plans on spending $22 billion on charitable activities over the next decade, focusing on scientific research. Some of this money will go toward funding new COVID-19 vaccines, according to the Guardian.

Nevertheless, while this year was a great one for the charity, Chief Investment Officer and Managing Partner of the Investment Division at Wellcome Nick Moakes said the fund will still operate with caution.

“We continue to prepare for a more difficult environment as global fiscal and monetary policy becomes less favorable to financial assets. Our focus now is therefore to find more investments in assets with structural tailwinds that can underpin future long-term returns,” Moakes said in a press release.

Blackstone Invests $3 Billion in CDPQ-Owned Invenergy Renewables

The Quebecois pension fund will remain a majority owner, and Invenergy management will run the firm.

By Michael Katz

Funds managed by Blackstone Inc.’s Blackstone Infrastructure Partners have invested US$3 billion in Invenergy Renewables, the largest private renewable energy company in North America, which is majority owned by the C$390 billion (US$310.2 billion) Canadian pension Caisse de dépôt et placement du Québec (CDPQ).

CDPQ and the Invenergy management team will remain majority owners of the company, and Invenergy will continue to run the day-to-day operations. Invenergy and its affiliates develop, own, and operate sustainable energy generation and storage facilities in the Americas, Europe, and Asia. The company is based in Chicago, with regional development offices in the US, Canada, Mexico, Colombia, Japan, Poland, and Scotland. It has more than 175 projects worldwide with a total of nearly 25,000 megawatts of energy.

The pension fund first invested in the company over eight years ago when it acquired a minority interest in a portfolio of Invenergy wind farms in 2013, which included 11 projects in the US and two in Canada. In April of the following year, CDPQ added a second Quebec park to its portfolio by investing C$42 million in Invenergy-operated Parc des Moulins in Thetford Mines. Then in July of that year, the pension fund announced it had acquired a 24.7% interest in Invenergy Wind. In 2018, CDPQ increased its stake in Invenergy to 52.4 %, and in late 2020 it invested another US$1 billion in the company.

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Last year, CDPQ announced a climate change strategy that it is using as a guide to reach a net-zero portfolio by 2050, which includes a plan to triple the value of its low-carbon asset portfolio compared with 2017 to C$54 billion by 2025. It has also committed to exiting from oil production by the end of this year and said it will instead focus on projects and investment platforms that are dedicated to the transition to a sustainable economy.

In 2020, Blackstone announced it was targeting a 15% carbon emissions reduction across all new investments where the private equity firm controls energy usage within the first three years of ownership.