IDBI Mutual Fund has filed papers with Securities Exchange Board of India (SEBI) for the IDBI Healthcare Fund. This new filing is for a thematic fund which will focus on making investments in healthcare and health-allied sectors. Funds with similar themes have recently been launched by ICICI Prudential Mutual Fund (ICICI Prudential Pharma and Healthcare Diagnostics or PHD Fund) and Mirae Asset Mutual Fund (Mirae Asset Healthcare Fund). This fund will be open-ended in nature allowing investors to freely invest/redeem units on all business days. However, an exit load of 1% is applicable to fund units that are redeemed, switched out, transferred or systematically withdrawn prior to completion of 12 months from unit allocation date.
IDBI Healthcare Fund will invest between 80 to 100% of assets in equities and equity derivatives of companies operating in healthcare and allied domains. The scheme may also invest up to 20% assets in equities/equity derivatives of companies not related to the healthcare theme. Non-equity investments made by this thematic fund will not exceed 20% of assets and may include debt and money market investments including liquid fund units. Units of InvITs (Infrastructure Investment Trusts) and REITs (Real Estate Investment Trusts) may also be included in the scheme’s portfolio with a 10% cap on asset allocation. This fund will not engage in short selling or invest in foreign securities, securitized debt, ADRs (American Depository Receipts) and GDRs (Global Depository Receipts).
This healthcare fund from IDBI MF will benchmark itself against the S&P BSE Healthcare – Total Returns Index. This index comprises various companies operating in the broader healthcare domain and has provided returns 22%, -3.35% and 12.83% for the 1 year, 3 year and 5 periods. This shows a high level of volatility in the scheme’s chosen index and indicates that the fund will be a potentially high risk-high return investment. Key constituents of the benchmark index include top domestic pharmaceutical players including Sun Pharma, Cipla, Dr. Reddy’s Labs, Piramal Enterprises and Lupin.
IDBI Healthcare Fund will be managed Ashish Mishra, who currently manages the IDBI Diversified Equity Fund, IDBI Midcap Fund and IDBI Focused 30 Equity Fund. All of these schemes are relatively recent launches hence long term performance records are unavailable. The the 1 year and 3 year returns of the IDBI Diversified Equity Fund have been recorded at 6.62% and 8.82%. This indicates lackluster performance which is in line with the recent correction witnessed mid and small cap stocks however the situation may change significantly in the longer term.