Although healthcare is a big investment theme these days, it has not been a rewarding one lately for shareholders in Worldwide Healthcare Trust (LSE: WWH). The Worldwide Healthcare Trust share price has fallen 15% in the past year. Could that make this an attractive moment for me to add the company to my portfolio?
Why I like the idea of a healthcare investment trust
Healthcare is an area where I expect to see resilient and indeed growing demand in the long term. When it comes to taking care of their health, many people are willing to spend a lot of money if they have it. So the area can be lucrative.
But without medical expertise myself, it can be hard to assess the attractiveness of some healthcare shares. That is why an investment trust appeals to me, as I can hopefully benefit from a diversified range of investments chosen by a professional manager.
Looking down the list of Worldwide Healthcare’s five biggest holdings at the end of July, I see such familiar names as AstraZeneca, Bristol-Myers Squibb, Humana, and Roche. A lot of the trust’s focus is on pharma companies and healthcare suppliers. So by investing in a trust like this, I ought to be able to get diversified exposure to the healthcare sector.
The Worldwide Healthcare Trust share price has fallen
However, although I like the idea of buying shares in a healthcare-focussed investment trust, is this the right one for me? After all, the recent share price performance has been weak and the dividend yield is below 1%.
Over the past five years, the performance looks better. The Worldwide Healthcare Trust share price moved up by 26% in that period. That is a decent gain in my view, though not remarkable. During that timeframe, for example, AstraZeneca has moved up 119%. But investing in one share would not have given me the diversification of an investment trust. AstraZeneca has done well in recent years, but some of its competitors performed far worse.
The long-term trend for the shares has been positive, although some years have seen better performance than others. In 2019, for example, the Worldwide Healthcare Trust share price saw a 32% jump. So although I do not expect this investment trust will ever match the performance of the best individual healthcare shares, I am hopeful it could give me a balance of diversified healthcare exposure and long-term growth.
My move
I would like to get some exposure to the healthcare sector for the long term. I see some advantages to doing that by buying shares in an investment trust. At the end of July, this particular trust was trading at a discount to its net asset value of less than 3%. Many pharma shares have what I regard as high price-to-earnings ratios right now. So I do not see the Worldwide Healthcare Trust share price as a bargain. It basically looks fairly priced for what it is to me.
But I would still consider investing some of my money in its shares as a way to participate in what I see as the long-term growth prospects of the healthcare sector.