Wellcome Trust announces 2009/10 annual results

In these circumstances, we were pleased that the Wellcome Trust’s investment portfolio recorded a return of 11.1 per cent, equating to £1450 million on a portfolio value of £13.0 billion at the start of the year. We note that the 16 per cent total return generated over the past two years has more than offset the decline in 2007/8, with returns now at a record high.

We have returned a total of 3.8 per cent over three years and 37.4 per cent over five years. Since the inception of the investment portfolio in 1985, it has provided a total return averaging 14.3 per cent a year, a real return of over 11 per cent per annum, which is above our long-term target of 6.0 per cent real.

These returns enabled us to spend £678 million this year in support of our mission and also supported our AAA rating, with our investment asset base ending the year at £13.9 billion.

Over the three years of the economic crisis, the portfolio has performed well. Growth and venture returns have been strongest at 25 per cent over the period, with direct knowledge assets contributing over 70 per cent. Our absolute return and buyout assets have been 20 per cent, propelled by distressed debt returns of 44 per cent. Equities and equity long/short returns have been 10 per cent. This was helped by the 12 per cent out-performance against global equities of our equity portfolio in the past two years, since the inception of direct management.

Our liquidity position continues to be strong, and we have enjoyed positive returns over five years in all asset classes and positive returns over three years in all asset classes except in Property and Infrastructure, which lost only 7 per cent overall. Our directly managed UK property assets made money at a time when the benchmark went down some 20 per cent.

Over the past year, equity exposure has increased steadily from 38 per cent to 45 per cent as equity markets have continued to move higher, cash levels have been allowed to decline and commercial property and buyout interests have been reduced. Through the year, we continued to increase our direct holdings in private companies.

Sir William Castell, Chairman of the Trust, said: "We are pleased that the consistency of our investment performance across the different asset classes enabled us to achieve an 11 per cent return in the past year. The deep partnerships with outstanding investment managers, which we have built over a long period, have enabled us, in recent difficult years, to manage liquidity comfortably and to deliver the excellent investment returns which have supported our extensive charitable spend. We continue to increase our direct investment, both in public and private assets, across the world, as opportunities occur."

Danny Truell, CIO of the Trust, added: "At a time when different regions of the world face diverse challenges and opportunities, it is more than ever necessary to invest in a range of global assets and strategies that collectively provide sufficient protection against adverse outcomes and sufficient exposure to positive returns, especially should inflationary pressures continue to rise. We attempt to do so in a flexible and proactive manner but would not underestimate the fact that new challenges are likely to arise."