Top Picks 2018: Tekla Life Sciences Investors Fund (HQL)

01/18/2018 5:00 am EST

Focus: HEALTHCARE

Nate Pile

Editor, Nate’s Notes and The Wagmore Advisory Letter

Tekla Life Sciences Investors Fund (HQL) is closed-end fund invests in a number of publicly traded and privately held companies doing work in the life sciences area, explains Nate Pile, editor of Nate's Notes.

It is a fund that I recommend for investors who know they want to be in biotech but also recognize that they do not like the risk and volatility that so often comes along with owning shares of individual companies in the sector.

Along with gaining exposure to a wide variety of companies in the biotech space (both in terms of what sorts of products they are developing, but also in terms of market cap and stage of development) with a single purchase, shareholders also benefit from the fund’s policy of paying out 2% of its net assets every quarter.  

This payout is usually made in the form of new stock (i.e., it is essentially set up as a dividend reinvestment plan), though shareholders who would rather receive cash instead of stock can request it by contacting their brokerage firm.

Naturally, shares of this fund tend to track the major biotech averages fairly closely in terms of direction and momentum, but, as mentioned above, the swings are often not as volatile as biotech stocks.

Despite this lower volatility, I still encourage folks to build their positions with several small purchases on a regular basis rather than doing it all at once in one fell swoop. Tekla Life Sciences is considered a strong buy under $18 and a buy under $22.

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