Best Investment Options – 2 Pharma & Healthcare Sector Mutual Funds you should buy in 2012

Mutual Funds pool money from investors and invest in Stocks, Bonds, Money market instruments and other Govt Securities.  There are various types of Mutual Funds and there are several Mutual Fund schemes in each category. I have already provided more details on types of mutual funds and on how to pick-up the right mutual fund in one of my previous posts.

Among the sector based mutual funds, Pharma & Healthcare sector mutual funds provides good returns over a period of time. While FMCG provides excellent returns, for diversifying the mutual funds, an investor can select the mutual funds in this sector for 3 to 5 years investment horizon.

Why an investor need to invest in Pharma & Healthcare  sector mutual funds ?
Pharma and Healthcare sector is offering consistent returns comparing to equity based mutual funds and comparing to any other sector based mutual funds (Excluding FMCG) over a years. The growing demand for Pharma and healthcare products is attracting several companies to invest in this sector.

Where does Pharma & Healthcare  sector mutual funds invest ?
These mutual funds invest in Pharma & Healthcare  blue chip equity stocks, PHARMA & HEALTHCARE midcap and Pharma & Healthcare small cap stocks. This sector is also an ever green sector and offers consistent returns on the good quality Pharma & Healthcare  stocks.

What are the risks involved ?
The returns through this Pharma & Healthcare  sector are limited limited comparing to FMCG sector Mutual funds. This sector is not to investors who expect > 15% annualized returns.

What are the top performing mutual funds in this sector?
There are 3 main mutual funds under this sector. One can choose SBI Magnum Pharma Fund or Reliance Pharma Fund . The returns are annualized. The longer you invest; you would get maximum returns over a period of time.


MF Scheme Aum
(Rs. Crores)
1 Year 2 Years 3 Years 5 Years
SBI Magnum Pharma Fund 42 6% 10% 25% 6%
Reliance Pharma Fund 584 -1% 5% 32% 16%

Conclusion:  Pharma & Healthcare sector mutual funds earned good returns and I felt this is one of the best invesment options one can look at it. The returns received are 2.5+ times compared to a bank fixed deposit. Pls note that there is no guarantee that the past returns would be received in future.  However this can be considered as indication about the growth of the returns.

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Suresh KP

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