Mutual Fund Update: Top pharma fund

Despite the poor performance of the S&P healthcare index and the underperformance of the pharma category some of the fund houses see this sector as an opportunity and are coming up with NFOs in this sector. Recently, Mirae Assets has come up with a NFO in the thematic funds with the healthcare fund which will open in the month of June.

This inspired us to analyse the pharma sector funds and their performance in the last one year. The pharma funds had previously in the year of 2014 has given stellar returns to investors, but post-2014 these funds have lost their shine. The last couple of years were tough for the sector which has dragged the performance of the category. The category Equity-pharma has given returns of 0.43 per cent in the last one year. Let's see how these fund categories performed.

From the above table, we can clearly see that in the last one year, except Reliance pharma fund, no other fund has managed to even beat the category. The fund has outperformed the benchmark and category with a large difference. So this was something that made us more curious and forced us to analyse the key reasons behind it. So we analysed the portfolio of the scheme. The scheme follows a focused approach and invests around 40 per cent in its top 5 holdings.

The top five holdings of the scheme include Divi's Laboratories with 11.76 per cent which has the highest allocation, followed by Abbott India with 10.34 per cent holding, Cipla with 9.55 per cent, Sun Pharmaceuticals with 9.22 per cent and Sanofi India 8.86 per cent. In the portfolio of the scheme, there are many outperformers like Divi’s Lab which has given a return of around 87 per cent and Biocon which have given a return of more than 100 per cent owing to which fund has managed to outperform.