3. Bert Livingston, independent financial representative, National Financial Services Group
Certainly, I am not a guru or money manager, but I have 35 years of experience in the financial world, and at age 61 I have personally and professionally seen the benefits of health-care advances and demographic shifts. My mother lived to age 95, but her first heart bypass was at age 67 and last one was at age 91 … and they did a double bypass with the heart still beating ... out of the hospital in six days … then lived to age 95!
A concentrated health sciences fund like Eaton Vance Worldwide Health Sciences Fund (ETHSX.LW—no-load share class) just makes sense demographically, and while a health sciences index might be more efficient, the medical research done by the money managers there has reduced volatility substantially. Yes, the Desert Island folks will hold long term, but when that term ends, volatility still needs to be taken into consideration, lest the investor becomes afraid, since his $30,000 is now as much as $600,000 at 10.5 percent return assumption at year 30 (not a prediction) and not taking into consideration the tax bracket of that island getaway!
The beta is .84, and the return in 2008 was negative 7 percent, I believe. Not anywhere near the negative 37 percent of the S&P 500 [the MSCI World Health Care Index was negative 21 percent in 2008]. Nothing like getting off the island with a fortune and having it disappear when reaching hard land! She/he will be age 40–50, I presume, and in need of medicine and care, too … helping the fund grow. It is a concentrated fund as well, just 38–40 stocks, so lots of conviction and research dedicated to their best ideas.
[Bert Livingston couldn't pick just one, failing the Desert Island Fund test, though providing one more interesting idea worth sharing.]
The Hennessey Gas Utility Index Fund (GASFX) is a theme on the burgeoning energy renaissance in America and perhaps the world, as natural gas is now in its initial growth stage. Yes, it might be obsolete in 30 years due to science, the opposite of the Health Sciences Fund—unless everything is cured by then—but amazingly, energy growth has this eternal feeling. It has been said that "the meek will inherit the Earth, but NOT the mineral rights." So the ambulance will be operated on natural gas, and the hospital will be heated by natural gas … perhaps the medical flight … if needed.
Eaton Vance World Health Sciences fund management fee: 1.39 percent
(Morningstar category average fee is 1.47 percent.)
Hennessey Gas Utility Index Fund management fee: 0.80 percent
(Morningstar category average fee is 1.29 percent.)
Disclaimer: Livingston owns both funds in his portfolio.
Livingston's Desert Island disc: (while Bert needs two funds, he only needs one song) Israel "IZ" Kamakawiwo'ole's "Over the Rainbow"
—By Eric Rosenbaum, CNBC.com