| AUG05 - There are a number of ETF's and closed end funds that cover this sector. The one we find most compelling is Blackrock Health Sciences Trust (BME). This CEF offers a nice balance between healthcare providers, healthcare equipment, pharmaceuticals and the growth potential of biotech companies. This CEF was launched in May of 2005, so is fairly new. Quote services may indicate a 6.11% yield, but this is not the product of dividends or interest, rather it's from writing covered calls. The fund manager plans to make quarterly payments in the .38 cents per share range, which would mean a 6% yield at current prices. The expense ratio is high at 1.26%, but is somewhat offset by the 5.5% discount from net asset value. |
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Blackrock Health Sciences Trust (BME) is a
closed end fund that was recommended in the
August 2005 newsletter at a price of $25.37. The
fund paid out a healthy 6% dividend since the recommendation
and hit a high price of $26.90 before
settling down to its current price of $25.26. Since
August the discount was reduced to zero for a time,
but has now returned to its 6% norm. This fund has
under performed our sector portfolio. In keeping
with our policy of pruning out portfolios we are
replacing this selection with iShares Dow Jones US
Financial Services (IYG). We think the new selection
will have a better chance for appreciation in the
coming months. |
