Biotech Values

[DewDiligence]

Re: HQH and HQL

>What are the salient differences between the two? I just received the Annual Report for HQL and hadn't heard of HQH until today. Do the holdings overlap?<

The holdings overlap greatly, which is why I recommend buying whichever one trades at a bigger discount to NAV.

The original intent was to have HQL be more oriented toward “pure” biotech and to have HQH include more pharma, medical devices, and healthcare services in the mix. In practice, however, the two funds have been similar enough to consider them as fungible.

>Also, are the nice dividends announced for both this year annual, quarterly, or unpredictable?<

Both funds return approximately 2% of NAV each quarter from capital gains. This policy was put into effect in the late 1990s to attempt to close what had been a huge discount to NAV. (This payout policy didn’t have much of an effect on the NAV discount, but the ensuing biotech bubble circa 2000 did!)

By default, your quarterly distribution comes in shares rather than cash; this is beneficial because shares acquired from reinvested capital are priced at the lower of market price and NAV.