Blackrock Health Sciences (BME): Safe haven in a 'healthly' ETF

"The current market volatility makes us want to run for shelter, a safe haven," notes Richard Lehmann, editor of The ETF Investor. One such haven he sees is health science, and offers an ETF for the sector.

"Other than Treasury bonds, which have their own risks, cash is certainly the safest. One might think of gold or natural resources as a safe haven, but once economies slow down, demand there will fall as well. Either way these safe havens are likely to be volatile in the near future.

"The health care sector is not as dependent on the overall economy and may be a safe harbor for now. There are a number of ETF's and closed end funds that cover this sector.

"The one we find most compelling is the Blackrock Health Sciences Trust (NYSE: BME) mainly because it captures the value in volatility by writing options on their holdings. The option writing activity moderates price swings and adds income to the fund.

"It invests in healthcare providers, healthcare equipment, pharmaceuticals and biotech companies. The fund is currently trading at $27.80 a –6.84% discount from its net asset value. The yield is 5.53%, which helps as an additional cushion. The expense ratio is high at 1.13%, but is somewhat offset by the –6.84% discount from net asset value."

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