XLV - THW Versus THQ: I Prefer Neither
2024-06-02 11:29:50 ET
Summary
- I previously recommended the THQ fund over the THW fund, as THQ's distribution was more sustainable.
- However, THQ has recently boosted its distribution to a 10.9% yield. This risks making it long-term unsustainable as well.
- I recommend investors buy low-cost passive ETFs and create their own 'high-yielding' funds by periodically selling a portion of their holdings.
- As long as the investment has higher total returns, this should result in a higher ending balance.
A while ago, I wrote a cautious article on the abrdn World Healthcare Fund ( THW ) (formerly known as the Tekla World Healthcare Fund), noting that it appeared to be an amortizing 'return of principal' fund that should be avoided by investors. While some analysts claimed that the THW fund is an investment for the next decade, I was not so sure about the THW fund and preferred the abrdn Healthcare Opportunities Fund ( THQ ), which has a much more sustainable distribution policy....
THW Versus THQ: I Prefer Neither