markettrend766
09-08-2009, 06:53 AM
Investors looking for exposure to the domestic pharmaceuticals sector can consider adding Reliance Pharma Fund to their portfolio. Benchmarked against the BSE Healthcare Index, the fund has consistently delivered superior returns over the last five years, beating both its benchmark and peer pharma funds by a considerable margin.
Its ability to unswervingly manage returns, regardless of the many company-specific hiccups usual to the pharma space makes a strong case for investing in it.
Prospects for the pharma sector are quite bright given that the number of authorised generics is expected to grow in the key markets of both US, Europe and Japan, led by the healthcare reforms by the respective governments. The fund, however, may be best suited only for investors who specifically want exposure to the Indian pharma sector.
Since a number of diversified equity funds anyway sport pharma stocks in their equity portfolio, buying into this fund only to diversify the overall portfolio may not be prudent.
Besides, though the fund primarily invests in the pharma sector — tagged as defensive — its risk profile isn’t any better than that of diversified equity funds.
This is because sector funds come bundled with high risk as their fortunes are particularly subject to the sector’s performance and dynamics.
Performance: Reliance Pharma Fund has returned about 19 per cent over the past year, beating the BSE Healthcare’s negative 12 per cent returns by a substantial margin. On a three-year and five-year basis too the fund has outpaced its benchmark. What’s more, even in its category of pharma funds, it has consistently delivered the highest returns.
This reflects well, not just on its ability to pick the right stocks but also to exit them on time, given the sector’s heightened risk in terms of regulatory actions, litigations and forex fluctuations.
That over one-, three- and five-year time-frames, the returns have either bettered or matched that of the Sensex, despite the poor performance of its benchmark also inspires confidence. On a monthly rolling return basis, over the last five years the fund outperformed its benchmark only half the number of times.
The average margin of out-performance, however, was double that of the underperformance.
Portfolio: The portfolio (latest available is June-09) surprisingly doesn’t sport many large-cap stocks.
On the contrary, there is an obvious bias to pharmaceuticals companies in the mid (54 per cent) and small (38 per cent) market cap categories.
Even though that pegs up the fund’s overall risk profile, subjecting it to the vagaries of the market, it has deftly shielded its NAV so far.
With global pharma companies increasingly seen forging alliance with generic players, the fund’s significant exposure to the subsidiaries of MNC pharma also holds potential for value unlocking.
Its ability to unswervingly manage returns, regardless of the many company-specific hiccups usual to the pharma space makes a strong case for investing in it.
Prospects for the pharma sector are quite bright given that the number of authorised generics is expected to grow in the key markets of both US, Europe and Japan, led by the healthcare reforms by the respective governments. The fund, however, may be best suited only for investors who specifically want exposure to the Indian pharma sector.
Since a number of diversified equity funds anyway sport pharma stocks in their equity portfolio, buying into this fund only to diversify the overall portfolio may not be prudent.
Besides, though the fund primarily invests in the pharma sector — tagged as defensive — its risk profile isn’t any better than that of diversified equity funds.
This is because sector funds come bundled with high risk as their fortunes are particularly subject to the sector’s performance and dynamics.
Performance: Reliance Pharma Fund has returned about 19 per cent over the past year, beating the BSE Healthcare’s negative 12 per cent returns by a substantial margin. On a three-year and five-year basis too the fund has outpaced its benchmark. What’s more, even in its category of pharma funds, it has consistently delivered the highest returns.
This reflects well, not just on its ability to pick the right stocks but also to exit them on time, given the sector’s heightened risk in terms of regulatory actions, litigations and forex fluctuations.
That over one-, three- and five-year time-frames, the returns have either bettered or matched that of the Sensex, despite the poor performance of its benchmark also inspires confidence. On a monthly rolling return basis, over the last five years the fund outperformed its benchmark only half the number of times.
The average margin of out-performance, however, was double that of the underperformance.
Portfolio: The portfolio (latest available is June-09) surprisingly doesn’t sport many large-cap stocks.
On the contrary, there is an obvious bias to pharmaceuticals companies in the mid (54 per cent) and small (38 per cent) market cap categories.
Even though that pegs up the fund’s overall risk profile, subjecting it to the vagaries of the market, it has deftly shielded its NAV so far.
With global pharma companies increasingly seen forging alliance with generic players, the fund’s significant exposure to the subsidiaries of MNC pharma also holds potential for value unlocking.