Top MF Performers in Aug 2024: Pharma and Healthcare Mutual Funds top the Chart with 5% Returns
In August the mutual funds focused on pharma and healthcare sectors stood out boasting an average return of approximately 4.75%. During this time approximately 14 funds related to pharma and healthcare were actively offered in the market.
There are various Pharma and Healthcare Mutual Funds that provide the highest returns from 1st August to 27th August 2024. The WOC Pharma and Healthcare Mutual Funds leads the chart with a return of 7.28%. ICICI Pru Pharma Healthcare and Diagnostics (P.H.D) Fund has given a return of 5.73%, while the return of Mirae Asset Healthcare Fund stands at 5.35%. HDFC Pharma and Healthcare Fund and the UTI Healthcare Fund have returns of 5.30% and 5.01%, respectively. The next on the list is Tata India Pharma and Healthcare Fund with a return of 4.89%, while the SBI Healthcare Opp Fund gives a return of 4.80%. At 4.62% of the return, the Quant Healthcare Fund made it to the list, while the DSP Healthcare Fund scored a return of 4.21%. On the far end, ITI Pharma and Healthcare Fund have managed a return of 4.04%, followed closely by the Nippon India Pharma Fund with a return of 4.03%. Following that is the Aditya Birla SL Pharma and Healthcare Fund, returning 3.99%, the return of LIC MF Healthcare Fund stands at 3.63% and last but not least, Kotak Healthcare provide a return of 3.60%.
Experts attribute a host of reasons to such outstanding performance. First, pharma and healthcare stocks were cheaper on valuation grounds compared to other sectors like defence and capital goods during the last two years. Second, pricing pressure on pharma stocks, especially in the US market, has been easing out gradually to pave the way for their good performance. The sector is also seeing a strong post-COVID-19 recovery.
Experts underscored that this combination of factors explained such overperformance by pharma and healthcare funds against the broader market.
During the last week of August, between August 19th and 23rd, pharma and healthcare funds returned over 10%. As many as 14 funds returned returns in double digits. Amongst these, HDFC Pharma and Healthcare Fund, WOC Pharma and Healthcare Fund and Quant Healthcare Fund provided returns at 12.93%, 12.22% and 12.19% respectively during this period.
However, pharma and healthcare mutual funds have returned mixed performance in the long run. For instance, the sector-based mutual funds lost around 12.24% and 9.84% in 2016 and 2022 respectively. In contrast, such schemes recorded their highest average return of around 66.47% during the COVID-19 pandemic in 2020 with some touching up to 76.90%. After a dismal 2022, these funds staged a recovery in 2023, returning an average of around 30.58%.
Experts suggest that the way forward for the investor in these funds would be adequately balanced. He suggests that one can invest 10-15% of the portfolio in pharma and healthcare funds. Even he advises being more consistent in the investment approach in such funds through an SIP and 25% allocation.
The prospects for the pharma and healthcare sector continue to remain upbeat. The domestic demand is seen to remain stable, and Indian companies are increasingly focusing on speciality areas, thus indicating continued strong performance. While noting above, one must understand that past performance may not be indicative of future results, and market conditions can alter very fast.
