The current pandemic situation may lasts for some years and need to live with Corona by taking necessary precautions. Some medical experts warning the 3rd & 4th waves in India in next few quarters. Only complete vaccination with mentioned precautions is the solution for controlling the Corona virus. During recent times, our Pharma companies extremely doing good in exploring the new vaccines and medicines for Corona. On the other hand, India is going to cross China soon in terms of population. Hence, there will be always huge demand for Healthcare needs. All these factors are the good reasons to invest in Pharma sector Mutual funds in India.
What Are Sector Mutual Funds?
Sector or Thematic Mutual funds are a type of Mutual funds which invest only the specific sector or theme-based mutual funds. For eg., Banking sector Mutual funds invest only in Banks, and IT sector Mutual funds invest only in IT & IT enabled companies. As these Mutual funds investments confined to a specific sector, hence the fund manager has limited options to invest. Also, if the sector faces any turbulances, that directly reflects in that sector Mutual funds. Hence, sector mutual funds are suitable only for high-risk profiled investors. Risk-averse investors are suggested to stay away from these funds.
Best Pharma Sector Mutual Funds to Invest in India
1. Nippon India Pharma Fund:
Nippon India Pharma Fund is the best Mutual fund in Pharma sector. This has been maintaining 1st rank from the last 5 years in its category. The strong stock portfolio and fund management making this Mutual fund in top position. From the last 5 years, it is giving 17.76% returns and from the last 3 years it is 29.27% returns and from the last 1 year the returns yielded is 62.43% to the investors which is better than any good Equity diversified mutual fund. 75% of its portfolio consists of Large-cap stocks and the remaining in Mid & Small-cap stocks.
2. SBI Healthcare Opportunities Fund:
SBI Healthcare Opportunities fund invests mainly in Pharmaceutical and Healthcare companies. This is second best Mutual fund in its category. If you have long-time horizon with more than 5+ years and high risk appetite, then can look into this Mutual fund. Around 98% of its portfolio consists Equity and the remaining Cash segment. The portfolio companies are showing excellent performance from last 3 years. Hence, from the last 3 years this fund yielding 24.62% which is far better than the Diversified Equity funds. From last 1 year, it is yielding around 63% to its investors and showing best performance of its category. This fund invests 70% in Large cap and the remaining 30% in Mid & Small cap companies. Hence, when compared to Nippon India Pharma fund, it is little bit aggressive.
3. UTI Healthcare Fund (G):
UTI Healthcare fund is also one of the best Pharma sector fund. From the last 3 years, it is giving consistent performance of 25.27% and the last 1 year, this fund yielding around 61%. Since April 2020, the performance of this fund rocketing. Its portfolio consists of 97.5% Equity and the remaining in Cash. Around 58% of its assets are in Large-cap stocks and the remaining in Mid & Small-cap stocks. Hence, this is bit aggressive when compared to the above 2 funds. Dr.Reddy, Aurobindo Pharma, Cipla, Sun Pharma and Divis Labs are the top 5 holding companies by this fund.
Things to Consider Before Investing into Sector MFs
Sector Mutual funds are suitable for Investors with high risk appetite
Sector Mutual funds are high oscillated and hence the time horizon should be long term to absorb these oscillations
Timing of entry and exit is very important. Some times, Markets are favorable to IT or to Pharma or to Banking based on the International and National factors. Now the wave is for Pharma.
Make sure that your Mutual fund portfolio is having enough diversification
During bullish trend, Sector Mutual funds benefit the most and yields benchmark-beating returns and vice versa.
Having track record of 5+ years
With performances higher than the inflation rate from last 5 years
From Prominent fund houses
Excellent fund management
Lower expense ratio
This data is for Academic purpose only. The data published on this post is just my opinion based on my own research and analysis and is provided as a general market commentary. As it does not take into account of your personal circumstances, please do not invest based solely on this information. By Viewing any material or using the information within this post you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general information provided here.