Additional Material from April 2026 Investment Trust Newsletter

We have two extra articles from the writing for the April issue of Investment Trust Newsletter, which is coming out this weekend. It was a busy news month, so these articles are included below.

We are surprised to see Literacy Capital (BOOK, 325p) on the long list of sharpest fallers, down by 16.2% over the month.  The trust’s results for the calendar year 2025 were dull, but not actually bad.  The adjusted and diluted NAV increased by 0.3% over the year, reflecting a mixed performance from the trust’s portfolio of unlisted small UK enterprises.  The trust did have some successes, including the realisation of its investment in Velociti Solutions that helped facilitate a £6m (10p per share) distribution to shareholders during the year.  BOOK also completed two new investments and says its investee companies remain prudently valued and modestly leveraged.  Clearly the trust has struggled to extend the excellent start it had on the market after its own IPO in 2021, but we think the managers deserve a much better rating than the current discount of 32.9%.  Interestingly, the broker Winterflood takes a less rosy view, commenting that they are struck by the marked slowdown in portfolio revenue and EBITDA growth (2% and 5% respectively, from 20% and 26% in Q1 2025). They say “the manager attributes this to uncertainty in the UK market, but we would suggest it warrants a deeper examination of portfolio company dynamics. The premise of this fund is to identify high-potential small companies, professionalise their operations and enhance their strategic capabilities. This has been executed successfully, generating a NAV TR of 208% since admission in June 2021, but a flat NAV over 2025 invites the question whether the fund’s current holdings meet the standard they have set.”  The next set of quarterly numbers will be keenly scrutinised, we suspect.

We already knew that RTW Biotech Opportunities (RTW, US$1.92) had a very good year in 2025, confirmed by the trust’s annual results published on 30^th March.  The NAV return for the year was 35.7%, helped by M&A take-outs at premium valuations, and the share price return was even better as the trust grew in scale and joined the FTSE 250 Index.  Rod Wong, the managing partner of the managers, said “2025 marked a decisive turning point for the biotechnology sector, bringing to a close a historic four-year bear market. After a record period of underperformance, we were pleased to see biotech indices finish the year ahead of both the S&P 500 and the Nasdaq. For RTW Biotech, this broader sector recovery, combined with our rigorous asset selection, delivered a standout year.”  He says the policy environment is stabilising in the US, and adds “looking ahead, biotech is entering a new phase of maturity. We are witnessing the evolution of science into profitable revenue, as evidenced by the emergence of new US$50bn market cap leaders. Furthermore, we are positioning the portfolio to capture two defining megatrends: the acceleration of drug discovery via AI tools and the high-efficiency innovation engine in China. Our deep expertise in the Chinese biotech market allows us to support the global licensing of assets that are iterating faster and cheaper than ever before.”  RTW shares have sold off along with the market, pushing the discount to NAV back out to 21.6%, which looks too wide to us.  Existing shareholders might top up holdings at this level.