Inside the mind of our Investment Manager, Ed Clark

More than a year has passed since the Covid-19 pandemic forced us into lockdown and our lives changed significantly. Charles Stanley and its staff have mostly been working from home and the way the company and its people have handled the rapid change in circumstances has been remarkable.

Individually, we have all faced our own highs and lows over this past year, not least adapting to our new work surroundings. Having welcomed my third child into the world during this pandemic, an arrival, which has presented many joys and a few challenges, I wonder what sort of world awaits him as we tentatively emerge out of lockdown?

Since the end of 2020, confidence returned to markets on hopes of an end to the pandemic.

Positive market sentiment will inevitably be difficult to maintain throughout the healing process, but we seem to be at the beginning of a long – and most likely volatile – path back to some form of new normal. There exists an undeniable pang of excitement that it might not be long before colleagues can meet again for a pint after work. Perhaps the thought of taking my eldest son to watch cricket over the summer might not be so farfetched.

Although there will be volatility – as we saw in February when there was a sell-off in the bond market – we can realistically expect a return to some form of normality over the second half of 2021. The reason we can hope an end is close is all down to science – the development of effective vaccines.

Having a new child in lockdown has made me take stock of some of the healthcare provisions we, perhaps, take for granted in this country. The fact it only took a handful of scientists in Oxford a weekend to design a Covid-19 vaccine is extraordinary. The team lead by Prof Sarah Gilbert saw it as an opportunity to demonstrate rapid vaccine development against a new viral threat.

On top of this, Oxford’s Clinical Biomanufacturing Facility, run by Catherine Green, quickly made the first batch of shots for Phase 1 safety trials. By the beginning of April, Oxford had enough vaccine to launch clinical trials. At the time of writing, more than 475 million people have now been vaccinated worldwide, with the Oxford vaccine playing a significant role in this achievement.

The importance of the biotech industry has never been more current. Last year was a pivotal year for the industry, re-emphasising the important role that these companies have in delivering the scientific innovation to tackle the world’s medical challenges.

A new awareness of the industry during the pandemic helped drive the Nasdaq Biotechnology Index up 26% in 2020. While news from the biopharma sector was dominated by Covid-19, the industry also saw developments that will position it for further growth – even after the virus is brought under control.

Big pharma companies have also warmed to gene therapy, which could help expand their pipelines beyond 2021. Having been viewed as a rather niche and potentially volatile area of investment in the past, partly due to M&A historically being a major contributor of returns, many now view this theme as one of the prominent areas of continued growth in investment over the coming years.

As investors, we continue to exploit the demographic, socioeconomic and technological tailwinds that the biotech and healthcare sector enjoys, including it within many of our clients’ portfolios. This exposure is predominantly through collective investments, which reduce risk in a volatile sector.

Biotech is no longer a world of geeks in white coats and greedy pharmaceutical companies. In years to come, I hope the individuals who developed the vaccine remain inspirational role models for a generation of children, my own included. The UK should be very proud of our global position in biotech and of the fact we have some of the best scientists and healthcare workers in the world. We are lucky as Britons – and as investors too.