Is Aditya Birla Sun Life Nifty Healthcare ETF a Worthwhile Investment?
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It has been historically proven that the wealth of a nation relies on the health of its citizens. The healthcare sector is one of India's fastest growing sectors, recognised as the cornerstone of a strong economy.
The most recent incident was the COVID-19 pandemic, which hindered economic activity, and highlighted the importance and inadequacies of India's healthcare system as well as the current state of medical infrastructure. The Indian government intends to increase the healthcare budget and establish India as a global healthcare destination.
All of this indicates that the healthcare sector is well-positioned for rapid expansion in the near term. However, with a growing population, the healthcare sector remains underpenetrated combined with sectoral measures. Hence, investors can be optimistic about the future growth of the Indian healthcare sector.
Aditya Birla Sun Life Mutual Fund has launched Aditya Birla Sun Life Nifty Healthcare ETF, an open-ended exchange traded fund tracking Nifty Healthcare TRI.
On the launch of this fund Mr A. Balasubramanian, MD and CEO at Aditya Birla Sun Life AMC said, "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. The Nifty Healthcare Index has grown more than 9 times from its base date vis-a-vis Nifty, which has grown 8 times in the same period. It has generated double-digit returns in both short-term (three years) and long-term (10 years)."
He added further, "As it is a passive fund, it minimizes the investing cost and need for stock selection, at the same time offering the benefit of share-like trading. The Healthcare ETF will be an easy way for investors to be a part of this sector's growth journey."
Table 1: Details of Aditya Birla Sun Life Nifty Healthcare ETF
| Type |
An open-ended exchange traded fund tracking Nifty Healthcare TRI. |
Category |
Exchange Traded Fund |
| Investment Objective |
The investment objective of the scheme is to provide returns that before expenses, closely correspond to the total returns of securities as represented by Nifty Healthcare TRI, subject to tracking errors. However, the performance of scheme may differ from that of the underlying index due to tracking error. The Scheme does not guarantee/indicate any returns. There can be no assurance that the schemes' objectives will be achieved. |
| Min. Investment |
Rs 500/- and in multiples of Re 1 thereafter. Additional Rs 100/- and in multiples of Re 1 thereafter |
Face Value |
Rs 10/- per unit |
| Entry Load |
Not Applicable |
Exit Load |
Nil |
| Fund Manager |
Mr. Lovelish Solanki |
Benchmark Index |
Nifty Healthcare TRI |
| Issue Opens: |
October 08, 2021 |
Issue Closes: |
October 20, 2021 |
(Source: Scheme Information Document)
The investment strategy for Aditya Birla Sun Life Nifty Healthcare ETF will be as follows:
Aditya Birla Sun Life Nifty Healthcare ETF will aim to predominantly invest in stocks constituting the Nifty Healthcare TRI. The scheme will be managed passively with investments in stocks in a proportion to the weightage of these stocks in the Nifty Healthcare TRI.
The investment strategy would revolve around reducing the tracking error to the least possible point through regular rebalancing of the portfolio, taking into account the change in weights of stocks in the index as well as the incremental collections / redemptions in the scheme. An ETF based on the Healthcare Index offering, the benefits of both mutual fund and stock trading, can be a good option to capitalise on the potential growth of the healthcare sector.
Being an exchange-traded fund, the scheme will only invest in the securities constituting the underlying index. Rebalancing of the scheme shall also be carried out whenever there is a change in the underlying index or any change due to corporate action with respect to the constituents of the underlying index within 7 days.
About the benchmark
The Nifty Healthcare Index is designed to reflect the behaviour and performance of the Healthcare companies. Nifty Healthcare Index is computed using free float market capitalization method, wherein the level of the index reflects the total free float market value of all the stocks in the index relative to that particular base market capitalization value.
NIFTY Healthcare Index comprises of the 20 largest healthcare-oriented companies by free float market capitalization. The index is rebalanced on a quarterly basis and reconstituted on a semi-annual basis.
The following is list of the top constituents under the index by their weightage as of now:
(Source: NSE Nifty Healthcare Index)
Under normal circumstances, the asset allocation will be as under:
Table 2: Asset Allocation for Aditya Birla Sun Life Nifty Healthcare ETF
| Instruments |
Indicative Allocation (% of net assets) |
Risk Profile |
| Minimum |
Maximum |
High/Medium/Low |
| Equity & Equity related instruments constituting Nifty Healthcare TRI |
95 |
100 |
Medium to High |
| Cash, Money Market & Debt instruments |
0 |
5 |
Low to Medium |
(Source: Scheme Information Document)
Who will manage Aditya Birla Sun Life Nifty Healthcare ETF?
Mr Lovelish Solanki will be the dedicated fund manager for this scheme.
Mr Lovelish Solanki is Fund Manager at Aditya Birla Sun Life AMC Limited. His qualifications are MMS (Finance) and BMS (Finance). He has an overall experience of over 10 years in Trading and Dealing. Prior to this, he was associated with Union KBC Asset Management Co Limited as Equity /Equity Derivatives - Trader and Edelweiss Asset Management Co. Ltd.
The other schemes Mr Solanki manages are Aditya Birla Sun Life Index Fund, Aditya Birla Sun Life Arbitrage Fund, Aditya Birla Sun Life Gold ETF, Aditya Birla Sun Life Nifty ETF, Aditya Birla Sun Life Gold Fund, Aditya Birla Sun Life Balanced Advantage Fund, Aditya Birla Sun Life Equity Savings Fund, Aditya Birla Sun Life Sensex ETF, Aditya Birla Sun Life Nifty Next 50 ETF, Aditya Birla Sun Life Banking ETF, Aditya Birla Sun Life Nifty Smallcap 50 Index Fund, Aditya Birla Sun Life Nifty Midcap 150 Index Fund, Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund.
Fund Outlook - Aditya Birla Sun Life Nifty Healthcare ETF
Aditya Birla Sun Life Nifty Healthcare ETF aims to provide returns that closely correspond to the total returns as represented by the NIFTY Healthcare TR Index, subject to tracking errors.
This offers investors access to promising rewards from investments in the healthcare sector. India is an emerging global health hub ripe with opportunities and this fund gives you access to the top companies of this growing sector. The passive investment strategy makes this fund available at lower costs and with lower active stock selection risk.
The scheme follows a 'natural selection process', allowing the NIFTY Healthcare Index to choose the best in the sector while diversifying across all healthcare sub-sectors. It eliminates the risk of active stock selection and fund manager's biases.
However, this scheme is a sector-oriented ETF that will aim to invest only in healthcare sector, which creates a concentration risk. Thus, this makes Aditya Birla Sun Life Nifty Healthcare ETF a risky investment proposition. Bear in mind that sectoral funds have a high-risk high-return investment approach.
Thus, this scheme is suitable only for aggressive investors with high risk tolerance and have an investment horizon of at least 5-7 years.
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Warm Regards,
Mitali Dhoke
Jr. Research Analyst
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