ITI Mutual Fund launches pharma and healthcare fund: Should you invest?

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Pharmaceuticals is one of India’s most globally competitive sectors, courtesy the Covid-19 crisis. People are more aware of the sector’s importance, leading to more money being spent. The Indian pharma fund managers are spotting the growth of pharma companies as a significant opportunity and are encashing it. Consider this: The Value Research data shows that the pharma funds have given annualised returns of 31%, 26.39%, and 26.39% over one, three, and five years, respectively as of October 19, 2021.

Recently, ITI Mutual Fund launched ITI Pharma and Healthcare Fund. The fund will invest in pharma and healthcare and is benchmarked against Nifty Healthcare Total Return Index.

Investment strategy

Sectoral funds are among the riskiest mutual funds. Since these funds invest exclusively in one area, they lack sector diversity, a primary cause for their high risk.

If the sector falls, all of the portfolio’s equities will collapse, with nothing to buffer the loss. These funds are appropriate only for the most seasoned investors, and even then, no more than 10% of the portfolio should be invested in them.

That said, ITI Pharma and Healthcare Fund will follow the investment philosophy of SQL – Margin of Safety, Quality of the business, and Low Leverage and offers a superior investment experience to its investors.

Management views

The pandemic has shifted a thrust towards healthcare, rising health insurance, and better diagnosis to bolster the pharma sector demand again.

“The Covid-19 pandemic has given a new thrust to the Indian pharma sector. ITI Pharma and Healthcare Fund is confident of offering a unique investment experience to its investors by adopting diligent and research-backed investment process,” said George Heber Joseph, Chief Executive Officer, and Chief Investment Officer, ITI Mutual Fund.

What should investors know?

-Minimum application amount is Rs 5,000 and in multiples of Rs 1 thereafter.

-Maximum total expense ratio (TER) permissible by Sebi is up to 2.25%.

-Entry load is not applicable, and exit load is 1% if redeemed or switched out on or before completion of 12 months from the date of allotment of units.

-The fund falls under the ‘Very high’ risk category, and investors should check the product suitability with their financial advisors.

– NFO opens on October 18, 2021, and closes on November 1, 2021.