Pharma mutual funds have been among the preferred sectors of investors during Covid. Many investors got into the fund schemes related to health care, knowing the fact that these funds are capable of delivering consistently exceptional performance in the past two years. So, what makes the pharma funds a better option for investors, and why should one invest in them?
Let’s find out everything about pharma mutual funds in-depth.
What are pharma funds?
Pharma mutual funds are essentially the mutual funds that invest in Indian pharmaceutical and healthcare stocks. These funds are also considered Equity mutual funds.
Pharma mutual funds can also be called the sectoral mutual fund, wherein a significant amount is invested in a particular sector, in this case, pharma. These mutual funds focus on generating substantial gains over the long run as pharma mutual funds are prone to get unstable in the short run. Hence, these funds are suggested to only those investors who want to stay invested in mutual funds for an extended period.
Few advantages related to Investing in Pharma Mutual Funds that you should know
Growing Sector:
The pharma sector has been one of the growing sectors in India for the last few decades. And the current Covid-19 situation took it to another level, wherein the pharmaceutical industry in India has seen growth like any other. With the ongoing demand for pharmaceuticals and the
increase in healthcare budgets, it is evident that pharma has enormous growth potential. For the next coming decade, the outlook will be the same. There may be some volatility in the short term, but the long-term growth prospects look promising in healthcare, making it a worthwhile sector to explore.
High returns:
Forget about the short-term investment. But if you want to play for a longer-term, pharma mutual funds are for you. They indeed have the potential to earn benchmark beating results for you. For investors willing to take a long-term approach to their investment, this is the best opportunity to gain attractive returns.
You get good exposure to leading companies in the pharma and healthcare sector:
It is often difficult for investors to choose the right company for investments. That is where pharma mutual comes into the role. Through Pharma mutual funds, the investors get 80% exposure to the health care & pharma sector. They can invest in a basket of top pharma & healthcare companies with funds like Nippon India Pharma Fund, Tata India Pharma & Healthcare Fund, Aditya Birla Sun Life Pharma & Healthcare Fund, ICICI Prudential Healthcare and Diagnostics (P.H.D). With the help of fund managers, you can select one that suits your financial needs and risk appetite.
Long-term benefits:
The covid situation isn’t going that soon, and strong demand for essential medicines would be there and aid growth for the companies. It is safe to say that pharma funds can help you generate
significant returns over a long period and achieve long-term financial goals. So, if you have that patience and time, you will definitely make money from your investments.
Diversifies your portfolio:
With pharma mutual funds, you get the advantage of exploring the ever-expanding financial market sector. If you have invested in sectoral funds like healthcare, pharma funds will definitely help you diversify your portfolio. To minimize the risk factors, you can opt for a SIP (systematic investment plan) to spread your investment over a period.
Security factor:
The pharma sector has been consistently growing, and it is expected to grow even further, which attaches a sense of security to the investors. It may hit bottom in a few instances, but the pharma sector is here to stay and will never go out of demand if you see it from a long-term perspective.
Although there are many benefits of investing in pharma mutual funds, as an investor, you should know that these kinds of mutual funds always have a high degree of risk associated with them. The rate of return is possible only if you have long-term investment plans, so for investors having short-term financial goals, pharma mutual funds may not be a perfect choice.
The pharma industry is currently showing positive trends. Ever since the pandemic hit the country, the industry observed a steep rise in its demand nationwide. Though the pandemic has slowed down, the pharma sector is still witnessing a spike in its demand. However, these trends are ever-changing and hence need serious consideration. Investors must get a thorough understanding of these funds & stay updated with the ongoing trends in the financial market. The market is ever-changing, with new trends emerging & vanishing every few years, and this time, the present trend is pharma funds. If an investor stays up to date with the current advancements in the healthcare sector, he can significantly boost his income through pharma mutual funds. One should be very cautious before investing.
