ITI Pharma and Healthcare Fund: Can it be a Profitable Investment Proposition?
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The healthcare and pharma sector in India is one of the biggest in terms of revenue and has been growing rapidly, which makes it highly appealing to investors. With the government's focus on contributing to advancements in basic healthcare facilities and the increase in demand for healthcare infrastructure amid the pandemic, this sector has been booming.
India is the largest manufacturer of drugs in the world, we have seen accelerated levels of vaccines and drugs production required to curb the spread of the COVID-19. However, experts are bullish on the healthcare industry from a long-term perspective, as it may face some volatility in the near term.
Healthcare and pharma is an evergreen sector, exhibiting opportunities to grow further with various technological advancements and measures. It offers investors the opportunity to gain from its potential growth by investing in companies under this sector.
ITI Mutual Fund has launched ITI Pharma and Healthcare Fund, an open-ended equity scheme investing in the Pharma and Healthcare sector. This fund house is the latest entrant in sectoral funds category of equity-oriented funds with the launch of this mutual fund scheme.
On the launch of this fund, Mr George Heber Joseph CEO and CIO at ITI AMC said, "The Covid-19 pandemic has given a new thrust to the Indian pharma sector. ITI Pharma and Healthcare Fund are confident of offering a unique investment experience to its investors by adopting diligent and research-backed investment processes. The fund house follows the investment philosophy of SQL - Margin of Safety, Quality of the business and Low Leverage and offers a superior investment experience to its investors."
Table 1: Details of ITI Pharma and Healthcare Fund
| Type |
An open ended equity scheme investing in Pharma and Healthcare |
Category |
Sectoral Fund |
| Investment Objective |
The investment objective of the scheme is to seek to generate long-term capital appreciation through investing in equity and equity related securities of companies engaged in Pharma and Healthcare. However, there can be no assurance that the investment objective of the scheme would be achieved. |
| Min. Investment |
Rs 5,000 and in multiples of Re 1 thereafter. Additional purchase Rs 1,000 and in multiples of Re 1 thereafter. |
Face Value |
Rs 10/- per unit |
| SIP/STP/SWP |
Available |
| Plans |
|
Options |
- Growth
- Income Distribution Cum Capital Withdrawal Option (IDCW)
|
| Entry Load |
Not Applicable |
Exit Load |
- 1% if redeemed or switched out on or before completion of 12 months from the date of allotment of units;
- Nil, if redeemed or switched out after completion of 12 months from the date of allotment of units.
|
| Fund Manager |
- Mr Pradeep Gokhale
- Mr Rohan Korde
- Ms Hetal Gada
|
Benchmark Index |
Nifty Healthcare Total Return Index |
| Issue Opens |
October 18, 2021 |
Issue Closes |
November 01, 2021 |
(Source: Scheme Information Document)
The investment strategy for ITI Pharma and Healthcare Fund will be as follows:
ITI Pharma and Healthcare Fund aims to predominantly invest in equity and equity related securities of companies engaged in pharmaceuticals production and healthcare services with to provide long-term capital appreciation.
The scheme endeavours to invest in the stocks of companies under the healthcare and pharma sector. The benchmark index includes pharma and healthcare and the AMFI industry classification includes sectors/industry comprising of pharma and healthcare.
The scheme follows the SQL investment strategy, which stands for S - Margin of safety, Q - Quality of business, and L - Low leverage. The investment process involves the bottom-up stock selection with growth drivers and the top-down sector allocation of emerging themes.
The securities in the portfolio will be selected based on diligent screening and evaluation, managed by experienced personnel with continuous monitoring. The portfolio has a robust internal risk management framework and periodic evaluation of the portfolio size to optimise the risk reward trade-off.
The scheme would be agnostic to market capitalization and may take concentrated exposure to certain stocks. These are only indicative and the fund will look to invest in new and emerging areas of pharma and healthcare.
Under normal circumstances, the asset allocation will be as under:
Table 2: Asset Allocation for ITI Pharma and Healthcare Fund
| Instruments |
Indicative Allocation (% of net assets) |
Risk Profile |
| Minimum |
Maximum |
High/Medium/Low |
| Equity & Equity related instruments of companies engaged in pharma and healthcare |
80 |
100 |
High |
| Equity and Equity related securities of other Companies |
0 |
20 |
High |
| Listed Preference Shares |
0 |
10 |
Medium to High |
| Debt and Money Market Instruments |
0 |
20 |
Low to Medium |
| Units issued by REITs and InvITs |
0 |
10 |
Medium to High |
(Source: Scheme Information Document)
Who will manage ITI Pharma and Healthcare Fund?
Mr Pradeep Gokhale and Mr Rohan Korde; along with Ms. Hetal Gada for overseas invesments will be the dedicated fund managers for this scheme.
Mr Pradeep Gokhale is Senior Fund Manager at ITI Asset Management Company Ltd. He is a CA, CFA and B.com graduate with over 24 years of work experience in Fund Management, Equity Research, Credit Evaluation & ratings. Prior to this assignment, he was associated with Tata Asset Management Ltd. as Senior Fund Manager - Equities, Head of Financial Sector and Securitisation Ratings at CARE Ratings Ltd. and worked under corporate finance departments of companies like Bombay Dyeing, Tata International, and Lubrizol India Ltd.
The other schemes Mr Gokhale manages are ITI Multi Cap Fund, ITI Long Term Equity Fund, ITI Balanced Advantage Fund, ITI Small Cap Fund, ITI Large Cap Fund, ITI Mid Cap Fund, and ITI Value Fund.
Mr Rohan Korde is Fund Manager at ITI Asset Management Company Ltd. He has over 17 years of work experience in capital markets and his qualifications include Masters in Management Studies (Finance), Bachelor of Commerce. Prior to this, he was associated with BOB Capital Markets as Vice President Research, with Prabhudas Lilladher as Vice President Research, and Anand Rathi Share & Stock Brokers as Vice President Research. The other scheme Mr Korde manages is ITI Value Fund.
Ms Hetal Gada is Research Analyst at ITI Asset Management Company Ltd. She is holds a degree in MBA (Finance) and has close to 7 years of work experience in Equity Research. Prior to joining ITI AMC, she has worked with Centrum where she handled research in auto and consumer sector, Elara Securities and CRISIL, where she handled research on various sectors including metals. Currently, Ms Gada has no other schemes under her management.
Fund Outlook - ITI Pharma and Healthcare Fund
ITI Pharma and Healthcare Fund aims to invest in equity and equity related securities of companies engaged in pharma and healthcare sector. The scheme offers exposure to one of the most rapidly growing & evolving businesses in India, which is the pharma and healthcare sector.
The scheme will allocate its assets across the healthcare ecosystem such as, Domestic Pharma, Global Pharma, Diagnostics, Hospitals, Wellness, and medical devices. It offers investors with diversification benefits by investing in various Healthcare sub-sectors. The bottom-up valuation-based approach aims to analyse business and market cycles.
The scheme will be actively managed by the fund managers, offering the flexibility to invest across market caps and investing styles to optimize risk return payoffs. The scheme will capitalize on changing trends that are reshaping the global Pharma and Healthcare industry.
However, being a sectoral fund, it will aim to invest only in a single sector, which increases the concentration risk of the portfolio. The performance of the fund depends how it is being managed by the fund managers, which remains to be seen, and it may be prone to higher volatility if the sector goes out of favour.
Thus, this scheme is suitable for long-term equity investors who have an investment horizon of 5-7 years at least and a high-risk appetite to stomach the market volatility. Ensure that your investment objective is aligned with the fund.
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Warm Regards,
Mitali Dhoke
Jr. Research Analyst
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