Q: Hello 5I, could you give me your view on owning ETF HHL given that the upcoming US administration is not supportive on vaccines and has little faith in scientific medical research? Thank You
5i Research Answer:
The sector has been weak, and the appointment of RFK has worried investors. Trump wants lower drug prices and easier foreign importing, and RFK doesn't like vaccines. HHL is down 7% in a month. Its strategy of covered calls helps a bit, in that options income is continually coming in. The sector does tend to look longer term, and as prices adjust quickly we may see some consolidation after an initial mild panic, which is where we are now, we think, for certain stocks in the sector. Also, in many instances the 'bark' is less than the bite, and policies implemented may not be as bad as feared. Still, the sector is of more concern that it was two weeks ago. We would still be comfortable owning HHL as part of a broad portfolio.