This pocket-sized 286-crore pharma category was launched just nine years back. The category till date has five funds making it up. Over the years, it lingered at the bottom of the table but has now emerged out of the pocket. Initially, it was a laggard with uninviting returns. But the last quarter has seen it outshine other categories. Despite having a miniscule portion of the pie, pharma funds are topping the charts with their recent enticing performance.
JM Healthcare Sector
An average performer, yet a great buckler. Though this has been the case historically, it has also been proved recently when the fund fared well in the dwindling markets in the beginning of this year. While the category fell by 9.4% and the index by 3.3%, the fund experienced a fall of just 1.7%. The fund maintains a focussed portfolio averaging around 15 stocks. It may not offer astounding returns, but at least it offers the shield when the market is unfavourable.
Franklin Pharma
A very stable fund, which on occasions gets aggressive in its portfolio. The fund typically has a portfolio of 18-20 stocks and often takes concentrated bets. Like other pharma funds, this fund also took off as a large-cap, but gradually shifted towards mid-cap stocks. Its interest in small-cap stocks has also increased over time. The fund has given the maximum returns, since launch, of 29%.
UTI Pharma & Healthcare
An erratic performer that keeps beating and beaten by its benchmark quite often. The fund has been almost fully invested in a fairly stable set of pharma stocks. On an average the fund’s portfolio has about 20 stocks. Though the fund primarily invests in pharmaceutical stocks, it has taken small exposures in IT and diversified stocks as well. Despite its inconsistent performance, its five-year returns have been a handsome 27%. Not an opportunistic pharma play, the fund could be a nice choice for having a long-term pharma portfolio.
Magnum Pharma
A concentrated fund with an average 75% of its assets in top five holdings. Magnum Pharma has been the best performing fund in the category in 2003, 2004, and 2005; after which the fund’s performance slipped. Though the fund is dedicated to the pharmaceuticals sector, it has often drifted to few stocks in other sectors too, like automobile, consumer non-durable, financial services, and technology. The fund took advantage of the upward rally in the technology sector in 2005 and is also increasing its exposure to small-cap stocks.
Reliance Pharma
The biggest pharma fund has been a consistent out performer in the category since its launch. Among pharma funds, Reliance Pharma has the highest allocation to small-cap stocks, which makes its more volatile. Therefore, when it soars, it mounts steeper than its benchmark and when it tumbles down, its returns go head over heels. The funds portfolio has been stable with its buy and hold strategy, unlike other equity funds of the family. Despite its leeway to be fully invested in debt or cash, it did not make any such shift in the recent turmoil.
The author is CEO, Value Research
