Investors should choose the Quant Healthcare Fund based on their personal investing objectives and risk tolerance. The healthcare industry has conventionally been a great long-term investment but could be pretty volatile in the near term.
Subscription for QHF started from June 27 and will remain open till July 11, Quant Mutual Fund – with an AUM of about Rs 18,500 crore has launched healthcare fund focusing on life sciences, insurance and wellness industries.
Subscriptions for QHF opened on June 27 and will close on July 11. This is the second sectors vehicle from the fund house in a week. Quant BFSI Fund hit the market on June 20.
Very early this year, we decided to create a suite of funds based on our in-house business cycle insights,” said Sandeep Tandon, founder and chief investment officer, Quant MF.
“This is an excellent opportunity to introduce sectoral or thematic product funds.” The markets can correct any time, and the first sector or industry that may emerge after a correction is BFSI. That would be followed by healthcare, then technology, and manufacturing. “We look to introduce four to five sectoral themes by August-September,” Tandon added.
Quant MF’s Healthcare Fund
At least 80% of the fund corpus would be invested in healthcare, life sciences, insurance, and wellness industries. Pharmaceuticals, biotech, hospitals, medical devices, diagnostic services, clinical trials, outsourcing, telemedicine, medial tourism, health insurance, medical equipment, medtech, and so on.
The scheme would have S&P BSE Healthcare TRI as its benchmark and would invest across market capitalisations so as to enhance risk-return payoffs.
He added that the VLRTs (value, liquidity, risk appetite, and time), its risk-reducing investment strategy, and predictive analytics technologies would be utilized to dynamically handle known risks and uncover opportunities throughout the portfolio.
The fund managers for this scheme would be Tandon, Ankit Pande, Sanjeev Sharma, and Vasav Sahgal. Along with the new scheme, Pande, Sharma and Sahgal, manage at the fund house 14-15 schemes.
What Works?
The pharmaceutical industry is one of the most promising industries in India, seeing as the medical tourism market of the country was estimated to be around US$2.89 billion in 2020 and is predicted to grow up to US$13.42 billion by 2026.
Brokerage Sharekhan said Indian pharmaceutical companies were relatively well placed to exploit the opportunities as they are globally competitive with a considerable market share in most markets.
In fact, excluding cost pressures, increased USFDA regulatory risk could slow down new launches and likely increase remedial costs – a headwind to sales and profit growth — in the near-to-medium term,” We are neutral in the sector in the short to medium term. “However, we believe this points to a strong long-term growth potential for Indian pharma companies,” it said.
According to the statistics from Value Research, pharma funds have provided 16.30 percent three-year and 15.95 percent five-year long-term returns, lower returns compared with other sectoral funds like technology and banking.
Pharma, in the short term, though, has been amongst the best categories across, returning 7.04% in one month and 15.44% directly in three months.
What Doesn’t Work?
Healthcare has been one of the most volatile sectors in the last few years. Pharma rebounded in 2020 after a year of considerable underperformance, on the back of the Covid-induced surge. However, calendar years 2021 and 2022 fared not so well once again for the sector.
Sharekhan said adverse regulatory news, delay in plant inspections and currency volatility may offset the funds’ financial success at the sector businesses if all other things remain equal for the short term. This is because the pharmaceutical industry is a cyclical one, so timing of entry and exit is very critical. The healthcare industry is big and fragmented, and companies operate in several sub-sectors.
Identification of which sub-sector to invest in will be defined by the investing approach of the fund,” said Money Mantra founder Viral Bhatt. Investors should invest in the Quant Healthcare Fund as per their personal investment objectives and risk tolerance. Till date, healthcare has been an outstanding long-term investment but, near term, is usually volatile. Please remember that the past performance of this fund is not necessarily a guide to future performance.
“Quant Healthcare Fund is a good long-term investment opportunity for investors interested in the healthcare sector. But investors should be aware of the risks and do their own homework before investing, ” For overall portfolio diversification, one large-cap or flexi-cap fund would do for most individual investors. Among the pharma funds, established schemes having some sort of track record and identifiable portfolio buildup are preferable.
Conclusion
On the whole, the Quant Healthcare Fund is a good bet for investors who have long-term faith in the fortunes of the sector. While life sciences, insurance, and wellness industries are considered mainstays, the fund believes in growth prospects going forward for this sector, which has remained resilient and promising in the Indian market, particularly. However, the healthcare industry is, by nature, volatile and cyclical, and will of its very nature be subject to short-term ups and downs in performance.
Mutuality investors must pay attention to their own investment objectives and risk tolerance before investing in this fund. To be sure, significant returns are possible, especially in light of the strong outlook for the pharmaceutical and healthcare sectors generally in India.
The Quant Healthcare Fund is managed by a team of seasoned professionals, coupled with guidance from the best advanced predictive analytics, and hence, is better positioned to meet such challenges. However, diversification being key, this fund should, in essence, complement a broader portfolio strategy that also includes more stable large-cap or flexi-cap funds. The investment in Quant Healthcare Fund should be done after understanding the opportunity and risk and aligning it with your overall financial goals and risk appetite.