Hambrecht & Quist Life Sciences

01/23/2014 6:00 am EST


Nate Pile

Editor, Nate’s Notes and The Wagmore Advisory Letter

My top idea for conservative, income-oriented investors in the coming year is a closed-end fund that invests in public and privately-held companies doing work in the life sciences arena, writes Nate Pile of Nate's Notes.

The life sciences industry includes stocks in biotechnology, pharmaceuticals, diagnostics, managed healthcare and medical equipment, and healthcare information technology and services.

This recommended fund—Hambrecht & Quist Life Sciences Fund (HQL)—was also our top pick last year, and the fund rose 44% in 2013.

In addition to rising in value, the fund has a dividend policy of paying out 2% of its net asset value of each quarter.

By choosing to take this payout in the form of a dividend reinvestment, rather than cash, investors have done very well for themselves as they've watched, both the size of their holdings, and the share price itself, increase as the years have rolled by.

To be sure, you will always be able to get more bang for your buck by owning individual biotech stocks.

However, for investors who want to be in biotech without taking on as much risk, we believe this closed-end fund represents a great way to participate in the growth of the sector, while still being able to sleep at night (plus, it is always nice to “get paid to wait!”).

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