Should you invest in Aditya Birla Sun Life Nifty Healthcare ETF?

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The healthcare sector is widely recognised as the cornerstone of a strong economy. According to the NITI Aayog Report 2021, the pharmaceutical sector’s total opportunity for growth will increase from 4.84 lakh crore in 2021 to 12.88 lakh crore by 2030, owing to rising income increased health awareness, and increased access to insurance, among other factors.

Additionally, the Indian government intends to expand healthcare spending to 2.5% of GDP by 2025 and establish India as a global healthcare centre. All of this indicates that the healthcare sector is well-positioned for rapid expansion.

Recently, in the month of May 2021 two healthcare ETF was launched by Axis mutual fund and ICICI Prudential mutual fund. The Axis Healthcare ETF and ICICI Pru Healthcare ETF in last three months has given a return of 1.4801% and 1.4836% as on 7 October 2021.

Riding on the healthcare sector expansion, Aditya Birla Sun Life AMC Limited has recently launched the Aditya Birla Sun Life Nifty Healthcare Exchange Traded Fund (ETF). It is an open-ended exchange-traded fund (ETF) that seeks to replicate the performance of the Nifty Healthcare TRI Index (Total Return Index).

“The Nifty Healthcare Index has grown more than 9x from its base date vis-à-vis Nifty, which has grown 8x in the same period. It has generated double-digit returns in both short-term (3 years) and long-term (10 years),” said A. Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC.

Investment strategy

The fund aims to take advantage of healthcare’s development potential while also providing investors with long-term capital growth. Investing in the Aditya Birla Sun Life Healthcare ETF gives investors access to the Nifty Healthcare Index while also providing exposure towards the healthcare sector that has shown great development potential and is a crucial element of the economy.

Management views

The management believes that as it is a passive fund, it will reduce investment costs and eliminate the necessity for stock selection while benefiting share-like trading. The Healthcare ETF will make it simple for investors to participate in the sector’s growth.

“Healthcare has become one of India’s core sectors, in terms of revenue, exports, and employment generation. This growth is reflected in the market performance of healthcare companies,” said A. Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC.

What should investors know?

-The minimum application amount for this fund is Rs 500, and subsequent applications will be in multiples of Rs 100.

– According to Regulation 52(6)(b) of the SEBI (MF) Regulations, an exchange-traded fund’s total expenses, including investing and advisory fees, shall not exceed 1% of the Scheme’s daily net assets.

-The scheme is an open-ended exchange-traded fund tracking nighty healthcare TRI.

-There is no entry and exit charge. However, the investor shall cover the cost of the bid/ask spread and brokerage and any other charges imposed by his broker while transacting in units of the schemes via the secondary market.

-The product falls under the ‘very high-risk category, and investors should consult their financial advisors to check its product suitability.