Axis Healthcare ETF NFO: Should you invest in it?

• Follow

One of India’s fastest-growing mutual fund house, Axis Asset Management Company launched industry’s first healthcare fund ‘Axis Healthcare ETF’ based on the 20-stock Nifty Healthcare index. The new fund offers (NFO) opened today and closes on May 10.

The NIFTY Healthcare Index has been a long-term wealth creator. It comprises the 20 largest healthcare-oriented companies by free-float market capitalization and has the ability to take exposure across the entire healthcare value chain including – hospitals, diagnostics players, pharmaceutical manufacturers and R&D players. India’s Healthcare industry has achieved global recognition for its capabilities and strong knowledge base and has strong continued growth potential.

“As a responsible fund house, we want to develop, introduce and provide the products that are relevant in the current context as well as in the long term,” said Chandresh Kumar Nigam, MD & CEO of Axis AMC.

Passive investing in India has gained quite the momentum, either through index funds or exchange-traded funds. It is a low friction investment strategy tracking a specific index as closely as possible. The passive approach of replicating benchmark also leads to a stable portfolio with limited turnover.

Apart from being cost-effective, ETFs let investors invest at real-time prices as opposed to end of day price by sector funds.

The NFO has two distinct advantages. “Pharma funds are more like pharmaceutical companies than healthcare. Here the horizon is broadened to cover everything under healthcare. So, that is one and second, being since it is an ETF, the costs will be slightly lower compared to fund that you may have in existence,” said Harshvardhan Roongta, Principal Financial Planner at Roongta Securities.

The new fund offer is suitable for investors who are seeking, long-term wealth creation solution through targeted sectoral exposure to the healthcare sector and seeks to track returns by investing in a basket of NIFTY Healthcare Index stocks with an aim to achieve returns of the stated index.

However, Roongta is of the opinion that since its sectoral fund it is ideal for a matured investor who understands the sector and knows when to exit. “While Axis as a fund house has demonstrated good performance but investors can look at the existing fund in the sector that has a proven track record of performance as an option,” added Roongta.

The neatly packed bite-sized exchange-traded fund and will be managed by Jinesh Gopani, Head – Equity of Axis AMC. The minimum application amount required is Rs 5,000 and in multiples of Re 1 thereafter.