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.

Reported by Anna Gordon

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%.

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.