Disclaimer: THIS IS NOT A PAID POST (Lol). However I am a trainer with many fund houses and to that extent there is a vested interest. Further disclaimer that I am a direct equity investor, and I do not invest in an NFO or a concentrated fund. However banking and pharma industries are very difficult in stock picking, hence I do think most people reading this blog should look at.

Reliance, SBI, UTI, Mirae…have a pharma fund and I have seen some good numbers over a long period of time. Pharma is a very tough industry and the out come of the fund management will depend on the ability of the fund manager to create a well balanced portfolio. Company selection, and weightage both will matter. Currency movement will matter. You are taking a multi pronged bet.

DSP BR Healthcare Fund is an open-ended equity scheme that aims to invest in the pharmaceutical and healthcare sector. It may include up to 25% of its portfolio in US healthcare stocks. The selecting of 25% US stocks gives it a hedge against the currency hardening – I mean the US $ strengthening. Such a hedge is not available in any other healthcare fund. Pharma stocks are trying to inch their way up after lying subdued for a very long time. It is also expected to invest in small, midcap and large cap stocks. I am sure the institutional strength of midcap funds will kick in and help this fund also. The timing of the NFO is not bad too – pharma – some people are seeing the green shoots for sure. Personally I do not have any mid or small cap pharma company is my portfolio – Biocon used to be a midcap about 10 years ago!! Now that too is large cap. I like the fact that some mid cap and small cap flavor can be found in this fund. I do think it is worth looking at a fund like this – as a lump-sum or even as a SIP but while being alert. The way one invests in a sectoral fund is when it is languishing. If you want to do a SIP do it, but in the NFO you will have to start with a lump-sum.

About the fund  (got from the fund house, remember its their claim):

• At least 80% of the portfolio will be invested in pharma, healthcare and allied sectors.
• Portfolio will invest in domestic and export-focused pharma stocks, hospitals, diagnostics labs, health insurance, contract research & manufacturing, evolving generic companies.
• Can additionally look at US-based healthcare stocks to access opportunities such as medical devices and equipment. Up to 25% of the portfolio can be in such international healthcare stocks.

Type of Scheme: Sectoral fund
Benchmark: S&P BSE Healthcare index
Minimum investment amount: Rs. 1,000 (one-time)
NFO Closes: November 26, 2018

Suitability
Requires higher risk appetite compared to diversified equity funds and a long-term holding period.