PGIM India Healthcare fund NFO: High-risk bet on long-term growth

PGIM India Mutual Fund on Tuesday launched the PGIM India Healthcare Fund, a new open-ended equity scheme for investing in the healthcare and pharmaceutical sectors. The fund, benchmarked against the BSE Healthcare TRI, opened for subscription on November 19, 2024 and will remain open until December 3, 2024. Investors can engage in continuous sale and repurchase of the fund starting from December 11, 2024. 

The fund will focus on capitalising on India’s growing healthcare sector.

 

“PGIM India Healthcare Fund provides a compelling opportunity for investors to capitalise on India’s burgeoning healthcare sector which benefits from low cost, innovation, growing awareness for health insurance, rising FDI inflows, growing medical tourism, and more," said Ajit Menon, CEO of PGIM India Asset Management.

 

“The healthcare sector is likely to witness multiple tailwinds, like stable and growing domestic demand, strong pricing power, superior export potential due to India's competitive advantage, and the China +1 strategy being pursued by global pharma,” said Vinay Paharia, CIO of PGIM India.

 

What does the fund offer?

 

The scheme will primarily invest in pharmaceutical and healthcare companies, with at least 80% allocated to this sector. Up to 20% of the fund may be directed towards other equities, debt, money market instruments, REITs & InvITs, and foreign securities, including overseas ETFs.

 

PGIM India plans to cover diverse areas within healthcare, from healthcare services such as pharmacies, diagnostics, hospitals, and health insurance, to healthcare manufacturing, including CRAMS (Contract Research and Manufacturing Services), medical devices, speciality chemicals, and API (Active Pharmaceutical Ingredient) manufacturing.

 

Anandha Padmanabhan Anjeneyan, Senior Fund Manager - Equities at PGIM India, highlighted the sector's pricing power, especially during inflationary periods. “The healthcare sector has relatively inelastic demand, which results in superior pricing power, especially in an inflationary environment. This provides an opportunity for an investor to compound capital over long periods of time,” Anjeneyan said.

 

Who is this fund for?

 

This fund may appeal to long-term investors looking for exposure to healthcare, given the sector's growth potential driven by rising income levels, shifting attitudes toward preventive healthcare, and increasing government expenditure projected to reach 2.5% of India’s GDP by 2025, according to a press release by PGIM India Mutual Fund.

 

Risk involved

 

As with any sector-specific fund, investing in healthcare carries risks associated with market fluctuations and sector-specific factors. Investors are advised to consider the unique risks tied to healthcare and pharmaceuticals, including regulatory changes, fluctuating demand, and potential competition from global markets.

 

Suitability: The fund is designed for investors seeking:

Long-term capital growth.

Investment in equity and equity-related securities of pharmaceutical and healthcare companies.

 

The risk level is classified as "Very High"

 

Benchmark riskometer: The benchmark for this scheme is the AMFI Tier 1 Benchmark – BSE Healthcare TRI, also rated as "Very High" risk.

 

Mutual fund investments come with market risks; potential investors should read all scheme-related documents carefully.

 

Key details for investors

 

NFO period: November 19 - December 3, 2024

Benchmark: BSE Healthcare TRI

Fund managers: Anandha Padmanabhan Anjeneyan, Vivek Sharma, Utsav Mehta (Equity); Puneet Pal (Debt)

Exit load:

Within 90 days of unit allotment: 0.50%

Beyond 90 days: None

Minimum investment:

Initial purchase/switch-in: Rs 5,000, and multiples of Re 1 thereafter

Additional purchase: Rs 1,000 and multiples of Re 1

SIP: Minimum of 5 instalments, Rs 1,000 per instalment

 

An NFO is the first time a mutual fund is open for subscription by investors. This is the phase where the fund begins raising capital.

 

Here are some key points to consider:

Subscription period: NFOs typically offer a subscription window of 10–15 days.

Minimum requirement: The minimum investment for NFOs can range from Rs 500 to Rs 5,000, depending on the fund.

Expense: NFOs have an expense ratio, which is the annual cost of managing the fund. Lower expense ratios are considered more attractive as they can improve returns over time.

Risk: Some NFOs might have tax implications

Investment goals: Make sure the fund’s investment goals align with your financial objectives.

Fund manager’s expertise: It's always a good idea to assess the experience of the fund manager before investing.