As per the India Brand Equity Foundation, Indian pharma industry ranks third for pharma production by volume worldwide. The recent government measures such as the lately approved PLI scheme for the pharma industry has been extended from FY21 to FY29. With the boost, there shall be an investment worth Rs. 15000 crore into the sector. Also, the pandemic outbreak has only brightened the prospects.
As of 2021, the market of pharma industry as per the Indian Economy Survey is estimated at US$ 42 billion in 2021 and expected to scale to US$65 billion by 2024 and further scale to US$120-130 billion by 2030.
Amid all such endeavours and the recent aggressiveness the sector is witnessing due to Covid 19 vaccine push etc., it will not be wrong to bet on Indian pharma growth story.
But is the sector suitable for all investors. Here we will discuss the same in brief before listing the best performing mutual funds.
What are Pharma Mutual Funds and who should invest in pharma mutual funds?
Pharma mutual funds are a sectoral or thematic mutual fund category that invests primarily in pharma sector companies. In fact, they have been provided a mandate to invest 80 percent of the corpus in pharma. So, the performance of the fund depends on the industry’s performance. In the past 2 years, So, by and large these funds shall be ideal for affluent and discerning investors who have a good risk appetite too.
|Fund||NAV||1-yr return||3-year||5-year return|
|UTI Healthcare Fund||166.28||25.75%||72.24%||79.61%|
|ICICI Prudential Pharma Healthcare And Diagnostics (P.H.D) Fund||20.56||25.00%||63.00%||–|
|Nippon India Pharma Fund||306.64||29.90%||78.34%||97.29%|
1. UTI Healthcare Fund:
The pharma equity fund commands an AUM of Rs. 852 crore as on May 31, 2021. The fund carries high risk and even a high expense ratio of 2.69 percent.
Ideally those looking at diversifying their portfolio or those who can afford a higher risk can bet on the fund. SIP in the fund can be started for Rs. 500 while for lump sum minimum investment required is of Rs. 5000. The benchmark for the fund is S&P BSE healthcare TRI.
RS. 10000 monthly SIP started in the fund 3 years ago have grown into Rs. 6.10 lakh, here the invested amount was equivalent to Rs. 3.6 lakh.
Top holdings of the fund are Dr. Reddy’s, Aurobindo Pharma, Cipla, Sun Pharma, Divi’s Lab.
2. ICICI Prudential Pharma Healthcare And Diagnostics (P.H.D) Fund:
The fund size of the ICICI Prudential’s healthcare fund is Rs. 2683 crore. Expense ratio of the fund is 2.19 percent. The corpus of the fund is parked in equity and equity related instruments of pharma, healthcare, hospital, diagnostics, wellness etc. The fund was launched in the year 2018.
SIP in the fund can be started for as low as Rs. 100. Minimum investment for lump sum investment has to be Rs. 5000.
A SIP of Rs. 10000 per month has grown in value to Rs. 1.44 lakh, while Rs. 1 lakh lump sum investment is equivalent to Rs. 1.58 lakh.
Some of the top holdings of the fund include Sun Pharma, Cipla, Divi’s, Alkem, Dr. Reddy’s etc.
3. Nippon India Pharma Fund:
The fund has an asset size of Rs. 5237.9 crore. The high risk fund further carries an expense ratio of 1.95%. Ideally suitable for investors who understand the macros and are keen to bet on riskier funds for better returns than equity mutual funds.
SIP in the fund can be started for Rs. 100 only and the fund was launched 2004. The return since inception from the fund has been to the tune of 22.19%.
Top holdings of the fund are Cipla, Dr. Reddy’s, Divi’s, Aurobindo Pharma, Sun Pharma etc.Rs. 10000 monthly SIP in 3 years time with an investment of Rs. 3.6 lakh is worth Rs. 6.31 lakh.
Mutual fund investments are subject to risk. Individuals need to do their own research and analyst. In fact, the category of pharma fund is even riskier than equity mutual funds, so best suitable for individuals with high risk appetite. Note, the data here is given only for informational purpose only.