The Tata India Pharma & Healthcare Fund is a specialized mutual fund that focuses on the dynamic and ever-evolving pharma and healthcare sectors in India. Managed by Tata Asset Management Limited, this fund seeks to provide long-term capital appreciation by investing primarily in equity and equity-related instruments of companies in these sectors. Below, we delve into a detailed analysis of the fund’s performance, portfolio composition, risk metrics, and investment strategy.
Key Highlights – Tata India Pharma & Healthcare Fund
- Category: India OE Specialty – Health
- Benchmark: Nifty Pharma TR INR
- Morningstar Benchmark: BSE Healthcare PR
- Inception Date: December 28, 2015
- Fund Manager: Meeta Shetty (since March 9, 2021)
- Net Asset Value (NAV): INR 30.41 (as of December 13, 2024)
- Expense Ratio: 2.14%
- Total Net Assets: INR 12,139.23 million (as of November 30, 2024)
Investment Objective and Strategy – Tata India Pharma & Healthcare Fund
The Tata India Pharma & Healthcare Fund aims to capitalize on the growth potential within the healthcare and pharmaceutical sectors. The fund mandates at least 80% of its net assets to be allocated to equity or equity-related instruments in these sectors. This focused investment strategy leverages India’s robust pharmaceutical industry, renowned globally for its cost-effective manufacturing and innovation in generic drugs.
While the fund seeks long-term capital appreciation, it explicitly states there is no guarantee of achieving this objective or ensuring returns. This highlights the inherent market risks involved.
Performance Overview – Tata India Pharma & Healthcare Fund
Annualized Returns
The fund has consistently outperformed its benchmark and category in the long term, as evidenced by its annualized returns:
- 3 Years: 21.04% (Fund) vs. 20.62% (Benchmark) and 20.22% (Category)
- 5 Years: 27.10% (Fund) vs. 26.92% (Benchmark) and 27.47% (Category)
Trailing Returns
The trailing returns over various periods highlight its resilience and growth:
- 1 Year: 39.78%
- 6 Months: 15.58%
- 3 Months: -3.62%
Quarterly Returns (2024)
- Q1: 10.75%
- Q2: 4.62%
- Q3: 18.85%
The strong quarterly returns in 2024 underline the fund’s ability to capitalize on market trends effectively.
Portfolio Composition
Asset Allocation
- Stocks: 95.72%
- Cash: 4.28%
- Bonds: 0.00%
The fund’s portfolio is almost entirely invested in equities, reflecting its aggressive growth strategy.
Equity Style and Market Cap Distribution
The portfolio skews heavily towards large-cap and growth-oriented stocks:
- Large Cap: 60.99%
- Medium Cap: 22.67%
- Small Cap: 4.01%
- Giant Cap: 12.33%
Top Holdings
The fund’s top 10 holdings account for 59.26% of its total assets, ensuring focused exposure to high-performing companies:
- Sun Pharmaceuticals (11.80%)
- Aurobindo Pharma (7.71%)
- Lupin (6.93%)
- Cipla (6.19%)
- Dr. Reddy’s Laboratories (6.09%)
- Divi’s Laboratories (5.34%)
- Fortis Healthcare (4.64%)
- Zydus Lifesciences (3.75%)
- Alkem Laboratories (3.50%)
- Apollo Hospitals Enterprise (3.31%)
Sector Allocation
The fund maintains a concentrated sector allocation:
- Healthcare: 97.73%
- Basic Materials: 2.27%
Geographically, it predominantly invests in Asia, with 97.17% exposure to emerging markets in the region.
Risk and Volatility Metrics – Tata India Pharma & Healthcare Fund
3-Year Risk Measures
- Alpha: 1.32
- Beta: 0.93
- R-Squared: 96.12
- Sharpe Ratio: 0.91
- Standard Deviation: 15.14%
- Tracking Error: 3.16%
These metrics reflect a moderately high-risk profile with significant alignment to its benchmark. The fund’s lower beta (below 1) indicates slightly reduced sensitivity to market movements, while a Sharpe Ratio of 0.91 suggests good risk-adjusted returns.
Fund Performance Drivers – Tata India Pharma & Healthcare Fund
- Strong Healthcare Demand: The healthcare and pharmaceutical industries have seen steady growth due to rising domestic demand, increasing healthcare awareness, and export opportunities.
- Top-Performing Stocks: The fund’s focused investments in market leaders like Sun Pharmaceuticals and Cipla have driven strong returns.
- Emerging Markets Focus: With 97.17% allocation to emerging Asian markets, the fund capitalizes on growth opportunities in the region.
- Robust Portfolio Management: Meeta Shetty’s expertise since 2021 has played a pivotal role in the fund’s performance through strategic stock selection.
Investment Suitability – Tata India Pharma & Healthcare Fund
Who Should Invest?
- Sector Enthusiasts: Ideal for investors with a strong belief in the growth potential of the pharma and healthcare sectors.
- Long-Term Investors: Best suited for those with a long-term investment horizon to ride out market volatility.
- Moderate Risk Takers: Investors comfortable with sector-specific risks and market fluctuations.
Who Should Avoid?
- Short-Term Investors: Those looking for immediate returns may not find this fund suitable due to sector-specific volatility.
- Low-Risk Investors: The fund’s aggressive equity allocation may not align with conservative investment goals.
Pros and Cons
Pros
- Focused Sector Strategy: Provides targeted exposure to India’s booming healthcare and pharma industries.
- Strong Long-Term Returns: Consistent outperformance in the 3-year and 5-year periods.
- High Growth Potential: Benefits from India’s expanding healthcare market and increasing global exports.
Cons
- Sector-Specific Risks: Performance is tied to the pharma and healthcare sectors, making it vulnerable to sector downturns.
- High Expense Ratio: At 2.14%, the fund’s expense ratio is relatively high compared to peers.
- Concentration Risk: Heavy reliance on a few stocks and sectors can lead to volatility.
Conclusion – Tata India Pharma & Healthcare Fund
The Tata India Pharma & Healthcare Fund is a promising choice for investors seeking exposure to India’s thriving pharma and healthcare sectors. Its strong historical performance, coupled with robust portfolio management and strategic stock selection, underscores its growth potential. However, investors must weigh the sector-specific risks and align their investment goals with the fund’s aggressive strategy.
In summary, the fund is a solid option for long-term investors looking to capitalize on India’s healthcare growth story, provided they are comfortable with moderate risk and sectoral concentration. For more mutual fund analysis, For more mutual fund analysis, please click on mutual fund category.
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