In a market where sectoral trends shape investor returns, pharma mutual funds continue to stand resilient. With India’s healthcare and pharmaceutical industry poised to grow exponentially due to ageing demographics, rising health awareness, and increasing exports, investors are eyeing this segment for long-term value. In this context, we review five prominent pharma mutual funds that have shown impressive potential and are helmed by experienced fund managers.
These funds are distinct from infra sector mutual funds or infrastructure mutual funds that focus on core economy sectors. While infrastructure may benefit from capital expenditure cycles, pharma relies on innovation, regulatory clarity, and global demand trends. For long-term investors looking for diversification, sectoral funds such as pharma offer a unique alpha opportunity when timed with the business cycle.
Let us explore five leading pharma mutual funds in detail.
Launched on October 4, 2023, the HDFC Pharma and Healthcare Fund is a relatively new entrant but has quickly gathered an Asset Under Management (AUM) of ₹1,786 crores. The current Net Asset Value (NAV) stands at ₹17.60. Over the past one year, the fund has delivered a return of 27.3%. The fund has a strong equity orientation with 97.9% of the portfolio in equities. The allocation across market caps includes 41.1% in large caps, 18.1% in mid caps, and 38.8% in small caps. The fund is managed by Nikhil Mathur and has a beta of 0.7, indicating relatively low volatility, and a Jensen’s Alpha of 1.8.
Introduced on February 6, 2024, the WhiteOak Capital Pharma and Healthcare Fund has a NAV of ₹13.90 and a total AUM of ₹364 crores. Despite being new, the fund has delivered a 24.6% return in its first year. It holds 92.5% of its assets in equities and 2.8% in debt. Market cap distribution stands at 37.7% in large caps, 18.4% in mid caps, and 36.4% in small caps. Fund managers Ramesh Mantri and Dheeresh Pathak bring in-depth sector expertise. With a beta of 1.0, the fund has shown moderate correlation with the market and a Jensen’s Alpha of 0.6.
One of the oldest pharma funds in the Indian market, the SBI Healthcare Opportunities Fund was launched on July 14, 1999. With an AUM of ₹3,849 crores and an NAV of ₹439.90, the fund is well-established. Over the past one year, it has delivered a return of 19.4%, while its three-year and five-year CAGR returns stand at 28% and 23.5% respectively. The fund allocates 97% to equities and has a diversified market cap exposure: 41.9% in large caps, 16.7% in mid caps, and 33.6% in small caps. It is managed by Tanmaya Desai and Pradeep Kesavan. Its beta is 0.8, and Jensen’s Alpha is 0.4, indicating stable but lower excess return potential.
Launched on July 13, 2018, the ICICI Pru P.H.D Fund is one of the largest in the category, with an AUM of ₹5,728 crores and a NAV of ₹40.50. It has delivered a one-year return of 19.1%, a three-year return of 28.7%, and a five-year return of 24%. The fund has invested 96.4% in equities and 3.6% in other instruments. Market cap exposure includes 49.2% in large caps, 16.2% in mid caps, and 31% in small caps. The fund is managed by Dharmesh Kakkad, with a beta of 0.7 and Jensen’s Alpha of 1.2, suggesting strong risk-adjusted performance.
With a long track record since its inception on August 1, 2005, the UTI Healthcare Fund is another seasoned player. It manages ₹1,099 crores in assets and has a NAV of ₹295. In the last one year, the fund returned 18.5%. It has delivered 26.3% CAGR over the past three years and 21.7% over five years. The fund has 98.9% of its corpus in equities, with a focus on 34.2% large caps, 21.7% mid caps, and 42.9% small caps. Kamal Gada, the fund manager, has kept the fund’s beta at 0.7 with a Jensen’s Alpha of 1.0, reflecting consistent outperformance.
Final Thoughts
Pharma mutual funds have shown consistent performance and are backed by India’s structural healthcare growth. These funds are actively managed by experienced professionals and are suited for investors with a high-risk appetite and long-term investment horizon. However, it’s important to remember that sectoral funds are cyclical and may underperform during non-trending periods. Diversifying across sectors, including infrastructure mutual funds or infra sector mutual funds, can offer a well-rounded portfolio for steady growth.
Before investing, always consult with a registered financial advisor and evaluate how sectoral funds fit into your overall asset allocation strategy.
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