Sector Based funds can be most rewarding if one has knowledge of getting the timing right and that is not an easy skill. Pharma and healthcare sector mutual funds are performing well due to covid-19. Export of medicines and instruments impacts the returns of pharma funds. Below are 4 pharma funds performed above 25% in last one year. A US$33 billion opportunity, the pharmaceutical industry in India presents considerable potential for collaborative and outsourced R&D in drug development, biotechnology, chemicals, and manufacturing of medicinal products. India is the only country in the world that has the highest number of USFDA-approved plants for generic drug manufacturing outside the US.
In this blog, let us discuss on pharma funds and is it right time to invest now on pharma funds.
- Nippon India Pharma Growth Direct Fund
- Tata India Pharma & Healthcare Growth Direct Fund
- UTI Healthcare Growth Direct Fund
- SBI Healthcare Opportunities Growth Direct Fund
Nippon India Pharma Growth Direct Fund(29.61%):
It invests in Pharma and hospitals. Major holdings of the funds is Aurobindo pharma,Dr Reddys,Sun Pharma and many more. It provided 29% return in last one year. You can start with monthly 100 rupees in SIP of this fund. Expense ratio of this fund is 1.3%.
Tata India Pharma & Healthcare Growth Direct Fund(29.32%):
It invests in Pharma and hospitals. Major holdings of the funds is Lupin ltd,Dr Reddys,Sun Pharma and many more. It provided 29% return in last one year. You can start with monthly 500 rupees in SIP of this fund. Expense ratio of this fund is 1.2%.
UTI Healthcare Growth Direct Fund(28.81%):
It invests in Pharma and hospitals. Major holdings of the funds is Cipla ltd,Dr Reddys,Sun Pharma, Aurobindo and many more. It provided 28% return in last one year. You can start with monthly 500 rupees in SIP of this fund. Expense ratio of this fund is 1.77%. It is very expensive and expense ratio is much more higher than other funds in this sector.
SBI Healthcare Opportunities Growth Direct Fund:
It invests in Pharma and hospitals. Major holdings of the funds is Cipla ltd,Dr Reddys,Sun Pharma, Aurobindo and many more. It provided 27% return in last one year. You can start with monthly 500 rupees in SIP of this fund. Expense ratio of this fund is 1.25%.
In India market, Pharma sector funds are overvalued. It was PE of 83 in 2012. Now the PE of the Nifty pharma is 29%. Still it is overvalued. PE ratio between 22 to 26 would be considered good for pharma sectors. Keep a watch on pharma funds and wait for PE ratio to reach below 25. To better diversification and higher returns include 10% of your investment in sectoral mutual funds.
“Wait and Watch for pharma mutual funds”.
Once it reaches PE ratio below 25, you can invest in lump sum in pharma funds for long term investments. To start in monthly SIP mode without worrying about P/E ratio as it would be averaged in long term. Start one of the pharma funds and start investing for long term growth.
Banking services mutual funds are 4 years low. Right time to invest lumpsum?
LIC and EPF invests your money in Nifty Index. Are you investing?