Pharma Funds: Investment Potential
Dalal Street Investment Journal|December 18, 2023
Investors often assume that investing in the pharmaceutical sector is a safe bet given that its products and services are always in demand. However, investing in pharmaceutical funds requires a constant study of the market and the sector. Moreover, as they are more focused ona single sector, they offer no diversification benefit. Hence, even though they offer potentially higher risk, their underlying return is also on the higher end. Therefore, before you head towards investing in them, understand your risk profile, investment objectives and time horizon
Pharma Funds: Investment Potential

The Indian equity market, over the past few quarters, has witnessed substantial gains. This has resulted in heightened inflows into equity mutual funds. One important trend is sectoral or thematic mutual funds that are capturing investors’ attention, drawing in nearly ₹14,000 crore of inflows in the last five months. On a year-to-date (YTD) basis, sectoral or thematic funds had a cumulative net inflow of ₹22,871 crore.

This surge signifies a growing interest among investors willing to take on higher risks for potential rewards. Recent data from the Association of Mutual Funds in India (AMFI) highlights a shift in these funds’ fortunes, as indicated in the table below:

After a withdrawal of ₹169 crore in May, sectoral or thematic funds have consistently seen inflows since June 2023. In the month of October, thematic funds got a huge inflow of ₹3,896 crore, the second highest among equity categories. These sectoral or thematic funds focus on specific sectors or themes and are for investors comfortable with higher risk. In this article, we would be speaking about one of the standout performers of 2020 that experienced a downturn from August 2021 to March 2023. Nonetheless, it started to rebound at the onset of the financial year 2024. Indeed, we are talking about pharmaceutical funds.

The Nifty Pharma index surged from a low of 11,542.45 to a high of 16,279.10, resulting in impressive absolute returns of 41 per cent over a mere nine-month period. Concurrently, pharmaceutical funds delivered an average return of 38 per cent during this timeframe. Such a significant growth might instigate a fear of missing out (FOMO) among numerous investors.

This story is from the December 18, 2023 edition of Dalal Street Investment Journal.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the December 18, 2023 edition of Dalal Street Investment Journal.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM DALAL STREET INVESTMENT JOURNALView All
How To Invest In An Ageing Bull Market
Dalal Street Investment Journal

How To Invest In An Ageing Bull Market

Bull rallies (periods when stock prices rise) and bear declines (periods when stock prices fall) are natural parts of stock market cycles, but they don't follow a fixed timeline.

time-read
5 mins  |
July 29, 2024
Should You Entrust All Your Money To A Single AMC?
Dalal Street Investment Journal

Should You Entrust All Your Money To A Single AMC?

If you are a market participant, you have probably heard the quote 'don't put all your eggs in one basket', which suggests diversification. Investors often focus on diversifying across categories like large-cap, mid-cap and small-cap, but they may unintentionally overlook diversification across different AMCs. The question arises: is AMC-wise diversification really necessary? Rakesh Deshmukh takes a closer look at this scenario

time-read
7 mins  |
July 29, 2024
Wild Swings Engulf Global Equities
Dalal Street Investment Journal

Wild Swings Engulf Global Equities

U.S. stock markets experienced significant volatility. An early-week rally pushed the markets to new highs, but this momentum faded, primarily due to weaknesses in the tech sector. The major indices had a mixed finish with, S&P 500 and Nasdaq closed lower, while the Dow recorded a notable gain.

time-read
2 mins  |
July 29, 2024
U.S. Elections and China's Economy Hamper Commodities
Dalal Street Investment Journal

U.S. Elections and China's Economy Hamper Commodities

Commodity markets experienced selling pressure in the last fortnight, driven by uncertainties surrounding the upcoming U.S. presidential elections, concerns about the Chinese economy, and increased agricultural production in Brazil.

time-read
2 mins  |
July 29, 2024
Wealth Building For Retirement Through Mutual Funds
Dalal Street Investment Journal

Wealth Building For Retirement Through Mutual Funds

Retirement is one of the most crucial and lifechanging phases. It marks a period where maintaining your lifestyle becomes paramount even though your regular income stops.

time-read
3 mins  |
July 29, 2024
Mastering Investment with Information Ratio
Dalal Street Investment Journal

Mastering Investment with Information Ratio

Information Ratio helps in navigating the complexities of the investment landscape by assessing an active fund manager's performance. And though it has its limitations, it remains an essential part of the finance industry. The article explains what Information Ratio is and how investors can use it as another tool

time-read
6 mins  |
July 29, 2024
Plan To Be Financially Independent
Dalal Street Investment Journal

Plan To Be Financially Independent

Each of us aspires to be financially independent as it ensures having enough resources to be self-sufficient and control our finances.

time-read
2 mins  |
July 29, 2024
❝Technology is the new game-changer"
Dalal Street Investment Journal

❝Technology is the new game-changer"

With a new breed of young investors entering the financial markets, it is the use of technology that is increasingly playing a major role in how investments are done and tracked. Anand Radhakrishnan, Managing Director, Sundaram Mutual Fund, shares his opinion about how this factor is turning into a significant tool and how it will shape the strategies of his company

time-read
5 mins  |
July 29, 2024
What If Donald Trumps?
Dalal Street Investment Journal

What If Donald Trumps?

The potential election of Donald Trump as president in the U.S. carries significant implications for the Indian equity market. It could lead to changes in the global trade dynamics, in particular affecting the Indian IT sector while also raising inflation levels and leading to yet another revision in the visa programme for Indians who want to work in the US. The article takes a closer look at what may lie in store

time-read
6 mins  |
July 29, 2024
Sectoral Gains Make A Mark
Dalal Street Investment Journal

Sectoral Gains Make A Mark

Benchmark indices continued their uptrend, reaching new record highs, although the pace has slowed as the broader markets faced selling pressures

time-read
2 mins  |
July 29, 2024