BlackRock Health Sciences Trust underperforms passive XLV ETF despite narrowing NAV discount.

BlackRock Health Sciences Trust (BME) has recently shown gains mainly due to a reduced NAV discount rather than superior portfolio management. In contrast, the passive healthcare ETF XLV has consistently outperformed BME over 5- and 10-year periods with higher total returns and better NAV preservation. BME's shift from call options to capital gains distributions has not generated positive alpha compared to XLV. With BME's NAV discount now minimal and no tax benefits, investors may prefer XLV for better long-term returns.