Mirae Asset Healthcare Fund (NFO) – Should you invest?
Pharma and Healthcare is one of my favorite sector in the last decade. However, Pharma/Healthcare has been under performer in the last couple of years. In this uncertainty, Mirae Asset Healthcare Fund (NFO) would open for subscription on 11th June, 2018. This new mutual fund scheme would tap the opportunities in Pharma and Healthcare Sector. There are already few mutual fund schemes in Pharma and Healthcare, hence need to see how this new fund would catch attention of investors. Should you invest in Mirae Asset Healthcare Fund? What are the risk factors an investor need to consider before investing in this Mirae Asset Healthcare New Fund Offer (NFO)?
Also Read: Top 10 Aggressive Equity Mutual Funds to invest
Features of Mirae Asset Healthcare Fund
This is open ended mutual fund scheme which invests in equity and related instruments of Pharma, healthcare and allied sectors.
This scheme would open for subscription on 11th June, 2018.
This scheme closed for subscription on 25th June, 2018.
It would reopen for further subscription from 3rd July, 2018.
This scheme is available in both regular and direct plans.
Like any other MF scheme, each such plan offers both dividend and growth options. Under the dividend option regular dividends would be paid.
This scheme is available for lump sum and SIP options.
Minimum investment is Rs 5,000 and in multiples of Rs 1,000 there-off for lump sum investments.
Minimum SIP investment is Rs 1,000 per month and minimum SIP tenure is 5 months.
The NAV of the NFO is Rs 10 per unit now during initial subscription.
There is an exit load of 1% if you withdraw the units before 1 year.
This scheme is classified as high risk scheme.
This scheme benchmark is a S&P BSE Healthcare Index (TRI).
Scheme expense ratio is estimated up to 2.5% of the total assets on any day.
Who is the Fund Manager for of this Fund NFO?
The Fund Managers are Mr.Vijesh Kasara and Mr.Neelesh Surana.
What is the investment objective and strategy of this Mirae Asset Healthcare Fund?
This mutual fund scheme aims to generate long term capital appreciation by investing in equity and equity related securities of companies that are directly or indirectly in healthcare or allied sectors in India. Its investment strategy is to invest at least 80% in pharma, healthcare and allied sectors. It also has the flexibility to invest across market capitalization and selects investment opportunities within the portfolio. It has an endeavor to maintain 30-40 stocks within this concentrated portfolio.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern looks as follows:
1) It invests 80% to 100% in equity and equity related instruments of companies that are directly or indirectly from healthcare and allied sectors.
2) It invests 0% to 20% in equity and equity related instruments of companies engaged in other than healthcare and allied sectors.
3) It invests 0% to 20% in debt / money market instruments / domestic liquid mutual funds.
Since this is sector mutual fund, it would restrict within pharma/healthcare/allied sector stocks for investments.
Can NRI invest in this MF scheme?
Yes, they can invest in this scheme.
How is the Performance of Existing Pharma and Healthcare Mutual Funds?
Currently there are existing pharma and healthcare mutual funds, hence let us review how they are performing.
1) Reliance Pharma Fund: This is one of my favorite fund. This fund gave 13% returns in the last 1 year, 1% annualized returns in the last 3 years and 14% returns in the last 5 years. If you would have invested Rs 1,000 per month through SIP for 5 years, your invested value would have been Rs 60,000 and your investment would have grown to Rs 70,000 now. If you would have invested Rs 1 Lakh 5 years back, your investment would have now grown to Rs 1.9 Lakhs. The majority under performance in the last 1-3 years are due to the entire pharma sector being in a downtrend.
2) SBI Healthcare Opportunities Fund (erstwhile SBI Pharma Fund): This fund gave -5% (negative) returns in the last 1 year, -7% (negative) annualized returns in the last 3 years and 12% returns in the last 5 years. If you would have invested Rs 1,000 per month through SIP for 5 years, your invested value would have been Rs 60,000 and your investment would have grown to Rs 62,000 now. If you would have invested Rs 1 Lakh 5 years back, your investment would have now grown to Rs 1.8 Lakhs. The majority under performance in the last 1-3 years are due to the entire pharma sector being in a downtrend.
3) UTI Healthcare Fund (erstwhile UTI Pharma and Healthcare Fund): This fund gave 1% returns in the last 1 year, -6% (negative) annualized returns in the last 3 years and 10% returns in the last 5 years. If you would have invested Rs 1,000 per month through SIP for 5 years, your invested value would have been Rs 60,000 and your investment would have grown to Rs 61,000 now. If you would have invested Rs 1 Lakh 5 years back, your investment would have now grown to Rs 1.6 Lakhs. Even here, the major under performance in the last 1-3 years are due to the entire pharma sector being in a downtrend.
What are the risks involved in the banking sector fund?
One should consider some of these risk factors before investing.
1) This mutual fund scheme is a sector mutual fund scheme. Any sector fund is high risk as invests only in one particular sector.
2) Pharma and Healthcare sectors are under performers in the last couple of years. If you observe, some of these mutual funds gave negative returns in the last 2-3 years.
3) This fund invests up to 20% in debt instruments. Certain debt instruments carry credit risk and there could be a downfall in such instrument ratings and values.
Also Read: Top Mid Cap Mutual Funds for 2018
Should you invest in Mirae Asset Healthcare Fund?
It has been an evergreen sector over a decade where pharma / healthcare companies have been posting double digit growth in revenues and margins. However, due to stiff competition from US Drug makers, Indian drug exports have declined by 5% YoY last year. We have been seeing this in the last couple of years in terms of performance of pharma stocks. This could cause some pressure to pharma stocks in future too. However, this mutual fund scheme invests in health care and allied segments too, which includes hospitals, medical diagnostics, medical equipment companies, specialty chemicals, insurance, etc., If you wish to take advantage of investment opportunities from pharma and healthcare sector and willing to take high risk, investors can invest in this new mutual fund scheme for medium to long term of 3-5 years.
Mirae Asset Healthcare Fund NFO details can be downloaded from here.
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Suresh
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dear sir,
many thanks for your valuable research and analysis. i would like to know that should i invest in icici pru bharat consumption fund series 3 nfo or essel multicap nfo?
looking for your early reply as always.
thanks
k p c
Hi KPC, There are several consumption funds already. You can look into those cases before looking for ICICI Pru bharat consumption fund. Here is the link. https://myinvestmentideas.com/2018/01/best-mutual-funds-to-invest-in-2018-that-would-benefit-from-rural-theme/. regd Essel Multipcao nfo is another multipcap fund. There are several good multip-cap funds, you invest in those ones instead of investing in new ones. Unless it is unique fund, you should invest in existing funds
Nice Article!
Sir, I have a little doubt associated with the article. Can you please tell me how we can take advantages of investment opportunities in healthcare sector in brief. You respond to my query will be highly appreciable sir.
One of the best way is to invest in such mutual fund schemes
Dear Sir,
Nice article.
In article, it has been mentioned that “Who is the fund manager of IDBI Banking & Financial Services Fund NPO.”
The fund name is wrongly mentioned.
Hi Abhishek, I just corrected. Thanks for pointing it out the error.