1 Aug, 2014

Performance of Pharma funds Vs Others

Indian investors   have less access to researched view on equity markets and invest as per market buzz only. They choose to invest in funds or sectors which are generally in news and don’t care to look beyond the obvious. Pharma sector and funds are great example of it. Pharma sector has consistently performed well along with lower volatility as compared to other sectors; even then investors are less aware and interested in it.

pharma-funds-ifm

To discuss it in detail we will use some numbers to explain it. Annual return of pharma sector has been compared with few other sectors and NIFTY in below table. We could easily see that pharma sector has consistently outperformed all major sectors and overall market as well. Also other important thing to know is the consistency and lower volatility as shown in logarithmic chart. This sector has shown lower downfall as compared to other sectors which is good for any investor.

Date

CNX Pharma

BankNifty

CNX IT

CNX NIFTY

30-Jun-10

64.2%

29.0%

69.5%

23.8%

30-Jun-11

12.0%

18.8%

11.7%

6.3%

29-Jun-12

8.3%

-8.0%

-7.2%

-6.5%

28-Jun-13

29.5%

12.3%

8.0%

10.7%

30-Jun-14

26.3%

31.2%

49.4%

30.3%

 

Pharma Mutual Funds have given even better performance & even after this awesome performance, pharma sector funds have a size of less than Rs. 2,000 Cr. which is less than 0.2% of whole mutual fund industry of India. Also pharma funds are recommended by very few advisors and least come under the news scanners. It is the major reason that investors have not explored these funds to the extent.

Graph-of-CNX-Pharma-Bank-nifty-CNX-IT-CNX-Nifty

 

One should also be aware that pharma sector is considered to be negative beta sector which means that it moves opposite to the market. It limits the downfall of this sector as compared to others during the downfall. Also one should understand that pharma & healthcare has huge scope and always growing sector, reason being Indian companies are entering into high margin overseas markets and because of increasing healthcare needs worldwide as well. One more factor to know about is that so many patents are going to expire in next 10 years in USA which will open route to billions of dollars of market in coming period.

So taking each and every factor under consideration it can be judged why investors don’t choose right options. So one should also look beyond same kind of articles and news to find out other good options available & should also invest some part of his portfolio in pharma & health care sector.

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