The Wellcome Trust, Britain's biggest charity and largest private sector backer of medical research, lost £1.5 billion after some of its investments turned sour in the past year.

In a stock exchange filing this week the trust revealed that its investments after debt had shrunk from £15.1billion to £13.1billion in the year to September 30.

After paying out £500million in grants, that leaves £1.5billion of the shortfall down to the shrinking value of its investments in shares, property, hedge funds and other securities.

The losses will come as a blow to the trust, which earlier this year said that its investment performance was so strong that it planned to lift its grants by 60 per cent to £4billion over the next four years.

Danny Truell, chief investment officer at the trust, played down the loss as a short-term reverse. It was just one year and the trust had a time horizon of a minimum of three years, he said. Compared with overall stock markets, which posted losses of about 22 per cent in the same period, the trust's minus 10.8 per cent return was resilient, he argued. Over three years, the trust had made an 18 per cent return.

The declines would not make any difference to the trust's future backing for research, he said. A philanthropic powerhouse, the trust injects hundreds of millions of pounds a year into charities and research in many fields, including malaria, premature babies and human genetics.

Mr Truell also played down speculation that the trust must have been hit by the mayhem in financial markets in the past two months. The trust has billions of pounds tied up in hedge funds and private equity funds, the two asset categories posting massive losses in recent weeks.

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