{"id":528,"date":"2019-06-24T11:07:20","date_gmt":"2019-06-24T11:07:20","guid":{"rendered":"http:\/\/blog.certifiedfinancialguardian.com\/?p=528"},"modified":"2019-06-25T06:09:55","modified_gmt":"2019-06-25T06:09:55","slug":"aditya-birla-sun-life-pharma-and-healthcare-fund-a-healthy-investment-proposition","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2019\/06\/24\/aditya-birla-sun-life-pharma-and-healthcare-fund-a-healthy-investment-proposition\/","title":{"rendered":"Aditya Birla Sun Life Pharma And Healthcare Fund: A Healthy Investment Proposition?"},"content":{"rendered":"\n<p><a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.personalfn.com\/fund\/Aditya-Birla-Sun-Life-Mutual-Fund\" target=\"_blank\">Aditya Birla Sun Life Mutual Fund<\/a> has launched an open-ended sectoral fund, Aditya Birla Sun Life Pharma and Healthcare Fund (ABSLPHF). <\/p>\n\n\n\n<p>The fund house has launched this scheme aligned to seek gains from government reforms introduced to push the growth of pharma and healthcare service sector. <\/p>\n\n\n\n<p>The fund house is of the view, that Indian\nPharma industry is poised to touch a $ 100 billion mark by 2030. This is\nbecause:&nbsp; <\/p>\n\n\n\n<ul><li>Globally India is the world\u2019s\nlargest supplier of Generic Medicines,<\/li><li>India contributes to 50% of the\nglobal demand for various vaccines and generic drugs,<\/li><li>Domestic production is nearly\none-third of the US<\/li><li>Growing awareness within the\nhealth industry and rise in disposable incomes has increased the lifespan of\nindividuals has fuelled the demand for healthcare<\/li><li>Due to affordability and the\nquality of care in the country, medical tourism to witness a boost in its\nrevenues.<\/li><li>Under the National Health\nProtection Scheme (Ayushman Bharat Yojana), witnessed 27 lakh beneficiaries\ngain free hospital treatment and is stimulating growth in medical spends.<em><\/em><\/li><li>Besides, even health insurance domain is showing\nsigns of growing penetration and there is room for an increase in private hospitals\ndue to low bed density. <\/li><\/ul>\n\n\n\n<p>ABSLPHF\nseeks to gain benefits from such improvements in pharma and healthcare service\nsector.<\/p>\n\n\n\n<p>As per the current AMFI mandate, ABSLPHF will mainly aim to invest a minimum 80% of its total assets in companies that are from pharmaceutical and healthcare domain within the prescribed limits. &nbsp;Also, it may take a smaller exposure to equity and equity-related securities of other companies, debt and money market Securities, and Units issued by REITs &amp; InvITs. <\/p>\n\n\n\n<p>From a risk standpoint, given the&nbsp;<a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.personalfn.com\/fns\/essence-of-successful-investing?utm_source=equitymaster\" target=\"_blank\">portfolio allocation<\/a> is skewed heavily to equity, ABSLPHF is a high-risk contender and thus suitable only for investors who have a high-to-very high-risk appetite and an investment horizon of at least 5 years.<\/p>\n\n\n\n<p> Do note that sectoral fund is a sub-category of <a rel=\"noreferrer noopener\" href=\"https:\/\/www.personalfn.com\/fns\/which-equity-mutual-funds-to-buy-now\" target=\"_blank\">equity mutual fund<\/a>&nbsp;that invests in companies of one particular sector of the market. Sector funds are a very-high risk-very high return investment proposition, as the fortune of the fund is closely linked to the undercurrents of a specific sector, although it could invest across the market capitalization spectrum.  <\/p>\n\n\n\n<p>\n\n[<strong>Read:&nbsp;<\/strong><a rel=\"noreferrer noopener\" href=\"https:\/\/www.personalfn.com\/fns\/why-comparing-returns-to-risk-is-more-meaningful\" target=\"_blank\">Why Comparing Returns to Risk Is More Meaningful!<\/a>] \n\n<\/p>\n\n\n\n<p>From a tax implication standpoint, the Aditya Birla Sun Life Pharma and Healthcare Fund will be classified as an&nbsp;<a href=\"https:\/\/www.personalfn.com\/guide\/all-about-equity-mutual-fund\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">equity-oriented mutual fund scheme<\/a>.&nbsp;Hence, if redeemed within a holding period of one-year,&nbsp;Short Term Capital Gain Tax (STCG) tax @ 15% will apply. And if redeemed after a period of 1 year, the Long-Term Capital Gains (LTCG) in excess of Rs 1 lakh will be taxed @10%.<\/p>\n\n\n\n<p style=\"text-align:center\"><strong>Table 1:&nbsp;<em>NFO Details<\/em><\/strong><\/p>\n\n\n\n<table class=\"wp-block-table\"><tbody><tr><td>\n  <strong>Type<\/strong>\n  <\/td><td>\n  An open-ended equity scheme investing in Pharma\n  and Healthcare Services Sector\n  <\/td><td>\n  <strong>Category<\/strong>\n  <\/td><td>\n  Sectoral Fund\n  <\/td><\/tr><tr><td>\n  <strong>Investment Objective<\/strong>\n  <\/td><td colspan=\"3\">\n  The scheme provides long term capital\n  appreciation by investing in equity\/equity related instruments of the\n  companies in the Pharmaceuticals, Healthcare and Allied sectors in India.<br><br>\n  The Scheme does not guarantee\/indicate any returns. There can be no assurance\n  that the schemes\u2019 objectives will be achieved.\n  <\/td><\/tr><tr><td>\n  <strong>Min. Investment<\/strong>\n  <\/td><td>\n  Rs 1,000 and in multiples of Re. 1\n  thereafter.\n  <\/td><td>\n  <strong>Face Value<\/strong>\n  <\/td><td>\n  Rs 10 per unit\n  <\/td><\/tr><tr><td>\n  <strong>Plans&nbsp;<\/strong>\n  <\/td><td>\n  \u2022 Regular<br><br>\n  \u2022 Direct*<br><br>\n  <em>*\n  default option<\/em>\n  <\/td><td>\n  <strong>Options<\/strong>\n  <\/td><td><ul style=\"margin-left: 30px; list-style-type: disc;\"><li>Growth *\n<br><\/li><li>Dividend\n<br><ul style=\"margin-left: 10px; list-style-type: circle;\"><li>Pay-out Dividend\n<br><\/li>\n<li>Reinvest Dividend<\/li><\/ul><\/li><\/ul>\n* default option\n<\/td><\/tr><tr><td>\n  <strong>Entry Load<\/strong>\n  <\/td><td>\n  Nil\n  <\/td><td>\n  <strong>Exit Load<\/strong>\n  <\/td><td>\n  For redemption \/ switch-out of units: &#8211;<br><br>\n \u2022 On or before 90 days from the\n  date of allotment: 0.5% of applicable NAV.<br><br>\n \u2022 After 90 days from the date\n  of allotment: Nil\n  \n  <\/td><\/tr><tr><td>\n  <strong>Fund Manager<\/strong>\n  <\/td><td>\n  Mr Dhaval Shah\n  <\/td><td>\n  <strong>Benchmark Index<\/strong>\n  <\/td><td>\n  S&amp;P BSE Healthcare TRI\n  <\/td><\/tr><tr><td>   <strong>Issue Opens:<\/strong>   <\/td><td>\n  Thursday, June 20, 2019\n  <\/td><td>\n  <strong>Issue Closes:<\/strong>\n  <\/td><td>\n  Thursday, July 04, 2019\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<p style=\"font-size:10px;text-align:center\">(Source:&nbsp;<a href=\"https:\/\/mutualfund.adityabirlacapital.com\/-\/media\/bsl\/files\/resources\/forms\/sid----scheme-information-documents\/sid-absl-pharma-and-healthcare-fund.pdf?_ga=2.173178403.1253745770.1561350779-395817173.1556780214\" target=\"_blank\" rel=\"noreferrer noopener\">Scheme\nInformation Document<\/a>)<\/p>\n\n\n\n<p><strong>What is the Asset Allocation of Aditya Birla Sun Life Pharma and Healthcare Fund?<\/strong><\/p>\n\n\n\n<p>Under normal circumstances, the scheme&#8217;s&nbsp;<a href=\"https:\/\/www.personalfn.com\/fns\/why-you-should-not-ignore-personalized-asset-allocation-while-investing\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">asset allocation<\/a>&nbsp;or asset distribution weight will be as under.<\/p>\n\n\n\n<p style=\"text-align:center\"><strong>Table\n2:&nbsp;<em>ABSLPHF&#8217;s Asset Allocation<\/em><\/strong><\/p>\n\n\n\n<table class=\"wp-block-table\"><tbody><tr><td>\n  <strong>Instruments<\/strong>\n  <\/td><td>\n  <strong>Risk<\/strong>\n  <\/td><td>\n  <strong>Normal\n  Allocation (% of total assets)<\/strong>\n  <\/td><\/tr><tr><td>Equities &amp; Equity Linked instruments of companies in the Pharma, Healthcare   and Allied Sectors   <\/td><td>\n  High\n  <\/td><td>\n  80%\n  &#8211; 100%\n  <\/td><\/tr><tr><td>Other Equities &amp; Equity Linked   instruments   <\/td><td>\n  High\n  <\/td><td>\n  0%\n  &#8211; 20%\n  <\/td><\/tr><tr><td>Units issued by REITs &amp; InvITs   <\/td><td>\n  Medium\n  to High\n  <\/td><td>\n  0%\n  &#8211; 10%\n  <\/td><\/tr><tr><td>Debt and Money Market Instruments   <\/td><td>\n  Low\n  to Medium\n  <\/td><td>\n  0%\n  &#8211; 20%\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<p style=\"font-size:10px;text-align:center\">(Source:&nbsp;<a href=\"https:\/\/mutualfund.adityabirlacapital.com\/-\/media\/bsl\/files\/resources\/forms\/sid----scheme-information-documents\/sid-absl-pharma-and-healthcare-fund.pdf?_ga=2.173178403.1253745770.1561350779-395817173.1556780214\" target=\"_blank\" rel=\"noreferrer noopener\">Scheme\nInformation Document<\/a>)<\/p>\n\n\n\n<p><strong>What is the Investment Strategy of the\nScheme?<\/strong><\/p>\n\n\n\n<p>The corpus of the Aditya Birla Sun Life Pharma and Healthcare Fund will be primarily\ninvested in equity and equity related securities of the companies in the Pharma\n&amp; Healthcare Sector. The Scheme may also invest a small portion of its\ncorpus in money market instruments to manage its liquidity requirements. <\/p>\n\n\n\n<p>All companies selected will be analysed\nconsidering the business fundamentals like nature and stability of business,\nprospects of future growth and scalability, financial discipline and returns,\nvaluations in relation to the broad market and expected growth in earnings, the\ncompany&#8217;s financial strength and track record.<\/p>\n\n\n\n<p>The fund invests in debt securities and\nmoney market instruments issued by corporate and\/or state and central\ngovernment with the aim of controlling volatility and providing cash flows on a\ncontinuous basis. <\/p>\n\n\n\n<p>Rigorous in-depth <a href=\"https:\/\/www.personalfn.com\/fns\/can-you-ignore-default-and-liquidity-risk-while-investing-in-debt-mutual-funds\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">credit evaluation<\/a> of the securities proposed to be invested in will be carried out by the investment team of the fund manager or its fixed-income investments. In addition, the fund manager and his team will study the macroeconomic conditions, including the political, economic environment and factors affecting liquidity and interest rates.<\/p>\n\n\n\n<p>The portfolio shall be structured to keep the\nrisk at acceptable levels and invest across the Market cap. This shall be done\nthrough various measures including:<\/p>\n\n\n\n<ul><li>Broad diversification of\nportfolio focusing on Pharma, Wellness, Healthcare Services and Specialty\nChemicals.<\/li><li>Ongoing review of relevant\nmarket, industry, sector and economic parameters<\/li><li>Investing in companies which\nhave been researched. Companies deemed to be leaders in their respective\nproducts\/industry.<\/li><li>High-quality businesses\nexhibiting favourable economics, capable and trustworthy management teams.<\/li><li>Other parameters like operating\nprofit margin, net profit margin, P\/E ratio, better earnings visibility, etc.<\/li><li>Investments in debentures and\nbonds will usually be in instruments which have been assigned investment grade\nratings by any approved rating agency.<\/li><\/ul>\n\n\n\n<p>The scheme may also invest in ADR\/ GDR and\nequities of listed overseas companies. These investments will be made in line\nwith the RBI and SEBI guidelines and will be within the limits prescribed by\nSEBI\/RBI from time to time.<\/p>\n\n\n\n<p>The fund manager may, from time to time,\nreview and modify the Scheme\u2019s investment strategy if such changes are in the\nbest interests of the unitholders and if market conditions warrant it.\nInvestments in securities and instruments not specifically mentioned earlier\nmay also be made, provided they are permitted by SEBI\/RBI and approved by the\nTrustee.<\/p>\n\n\n\n<p><strong>Who will manage the Aditya Birla Sun\nLife Pharma and Healthcare Fund?<\/strong><\/p>\n\n\n\n<p>Mr Dhaval\nShah is the designated Fund Manager of the Aditya Birla Sun Life Pharma and\nHealthcare Fund. <\/p>\n\n\n\n<p>Mr Shah is a commerce graduate (B. Com), has an MMS (finance) degree to his credit from the University of Mumbai and is a CFA. Mr Shah is an Associate Vice President at Aditya Birla Sunlife Mutual Fund. He has over 15 years of work experience in Equity Capital Markets. He has also worked with Morgan Stanley Investment Management, Reliance Capital Asset Management Ltd. and Edelweiss Securities.<\/p>\n\n\n\n<p>At the fund house, currently, he co-fund\nmanages <a href=\"https:\/\/www.personalfn.com\/factsheet\/aditya-birla-sl-equity-hybrid-95-fund-g-direct-plan\" target=\"_blank\" rel=\"noreferrer noopener\">Aditya Birla Sun Life Equity Hybrid &#8217;95 Fund. <\/a><\/p>\n\n\n\n<p><strong>The outlook for Aditya Birla Sun Life\nPharma and Healthcare Fund:<\/strong><\/p>\n\n\n\n<p>In an endeavour to achieve the stated objective of the scheme, ABSLPHF will predominantly invest in stock of companies belonging to the Pharma, Healthcare and other allied\/ancillary sectors. &nbsp;The primary aim is to tap potential gains for the long term by investing focusing on Pharma business along with Wellness, Healthcare Services and Speciality Chemicals. <\/p>\n\n\n\n<p>The portfolio of the Aditya Birla Sun Life Pharma and Healthcare Fund as mentioned in the <a href=\"https:\/\/mutualfund.adityabirlacapital.com\/-\/media\/bsl\/files\/resources\/brochures\/equity\/pharma-leaflet-web-17619.pdf?_ga=2.79909911.1253745770.1561350779-395817173.1556780214\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">leaflet<\/a> will be constructed such that;<\/p>\n\n\n\n<ul><li>It will be biased towards (60% &#8211; 80%), <a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.personalfn.com\/mutual-fund\/looking-for-the-best-large-cap-funds-2019-find-out-here\" target=\"_blank\">large caps<\/a> and <a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.personalfn.com\/mutual-fund\/the-best-mid-cap-funds-to-invest-for-2019\" target=\"_blank\">mid-caps<\/a> and will allocate a small portion (10% &#8211; 20%) to <a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.personalfn.com\/mutual-fund\/want-to-invest-in-the-best-small-cap-funds-in-2019-read-this\" target=\"_blank\">small-cap<\/a> companies.<\/li><li>It will select high growth companies looking at its business scalability, stability, consistency, strong earnings growth potential, businesses exhibiting favourable economies and has capable and trustworthy management offered at reasonable valuations.<\/li><li>It will have a focused portfolio of 20-25 stocks of companies having a higher ROCE than the cost of capital and improving cash flows from operations.<\/li><\/ul>\n\n\n\n<p>But the fortune of the fund is closely linked to the performance of the overall Pharma and Healthcare Services sector, as the scheme is of a defensive sector.<\/p>\n\n\n\n<p>Besides, current valuations aren\u2019t cheap, and the average P\/E of S&amp;P BSE Sensex trails at 28.3x. Corporate earnings need to justify valuations. Although the equity markets corrected, and&nbsp;<a href=\"https:\/\/www.personalfn.com\/fns\/how-will-modi-20-drive-the-performance-of-your-mutual-fund-portfolio\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">the 2019 Lok Sabha election<\/a>&nbsp;results declared pushed the markets upward. It crossed the psychological mark of 12,000 (and on the S&amp;P BSE Sensex 40,000) but couldn&#8217;t sustain those levels.<\/p>\n\n\n\n<p>Even the Nifty 500 profit-to-GDP ratio is at a 15-year low. If the economic growth does not pick up from here on, it may hurt the bottom line of companies. It remains to be seen how the new Modi cabinet tackles the GDP growth (which seems to have lost the momentum of late), international crude oil prices movement, the inflation trajectory, and fiscal deficit as this affects the equities.<\/p>\n\n\n\n<p>[<strong>Read:<\/strong> <a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.personalfn.com\/fns\/will-modi-20s-new-cabinet-have-a-positive-impact-on-your-portfolio\" target=\"_blank\">Will Modi 2.0\u2019s New Cabinet Have A Positive Impact On Your Portfolio?<\/a>]<\/p>\n\n\n\n<p>Along\nwith the global headwinds in play; a wave of Trump policies, US-China Trade\nWar, and going forward even India&#8217;s relation with the US and rest of the world\nand Brexit will affect the overall markets. So even the Pharma, Healthcare and its\nother allied\/ancillary sectors will not be spared.<\/p>\n\n\n\n<p>Hence,\nthe construction of the portfolio would be a challenge for the fund manager and his team to spot opportunities\nin the current environment and the risk management measures they adopt. <\/p>\n\n\n\n<p>Thus,\nthere is extremely high risk involved, despite the good opportunities available\nfor long-term growth. So, consider the implications involved before investing in\nthe Aditya Birla Sun Life Pharma and Healthcare Sectoral fund as it is placed at\nthe higher end of the risk-return spectrum. <\/p>\n\n\n\n<p><strong>Hence invest in a sectoral fund only if\nyou:<\/strong><\/p>\n\n\n\n<ul><li>Have an extremely high-risk appetite<\/li><li>Can stay invested for 7-10 years without getting perturbed<\/li><\/ul>\n\n\n\n<p>[<strong>Read:&nbsp;<\/strong><a href=\"https:\/\/www.personalfn.com\/mutual-fund\/sips-to-invest-in-2019\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">Best SIPs To Invest in 2019<\/a>]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Aditya Birla Sun Life Mutual Fund has launched an open-ended sectoral fund, Aditya Birla Sun Life Pharma and Healthcare Fund (ABSLPHF). The fund house has launched this scheme aligned to seek gains from government reforms introduced to push the growth of pharma and healthcare service sector. The fund house is of the view, that Indian&hellip;<\/p>\n","protected":false},"author":4,"featured_media":531,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/528"}],"collection":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/comments?post=528"}],"version-history":[{"count":7,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/528\/revisions"}],"predecessor-version":[{"id":537,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/528\/revisions\/537"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media\/531"}],"wp:attachment":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media?parent=528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/categories?post=528"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/tags?post=528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}