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Edelweiss's healthcare fund offers benefit of international diversification

Allocation to a thematic offering like the newly-launched healthcare index fund should, however, be limited

Edelweiss Group


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Mutual Fund (AMC) has launched the MSCI India Domestic & World Healthcare 45 Index Fund. This is an open-end passive fund that will give Indian investors exposure to both domestic and global healthcare stocks. While many active funds focused on the pharma and healthcare segment are available in India, they invest in domestic stocks only.

The offering

This fund will have 70 per cent exposure to the domestic and 30 per cent to the international healthcare segment. In the domestic component, it will include the top 25 stocks based on market cap, covering sectors such as pharma, hospitals, diagnostics, life science and biotechnology.

On the global side, it will include 20 listed in the US belonging to four sub- sectors: pharma, healthcare, biotech and life sciences. "The fund provides investors with exposure to two themes that are not correlated with each other. The domestic component is a consumption growth story, while the international component is a research and innovation story. When you combine these two ideas together, you get a superior risk profile than you would from a pure domestic healthcare index," says Radhika Gupta, chief executive officer, Mutual Fund.

On the domestic side, the fund will give investors exposure to players in the domestic Indian pharma market (including subsidiaries of multinational focused on the Indian market). These players sell branded generic products in India, which gives this segment the characteristics of a consumer-oriented play. Two, investors will get exposure to large Indian pharma that are major players in the US and other developed markets, whether they have made a mark selling generics. Three, investors will get exposure to API (active pharmaceutical ingredients) manufacturers who supply to both Indian and global companies. And four, they will get exposure to hospitals and diagnostics centres.

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First Published: Fri, October 23 2020. 19:39 IST