Over the past 10 years, the S&P BSE Healthcare Index has gained an average of 14.38 percent. But on the contrary, the index yielded a massive return of 54.46 percent in 2020 alone. Although the epidemic highlighted the health sector last year, India is currently in the midst of a deadly second COVID-19 wave. This will motivate investors to put substantial money back into the sector. Here's everything you need to know about investing in pharmaceutical and healthcare funds nowadays.
Focus on the health sector
The domestic pharmaceutical industry is poised to grow by about 8-11 percent in CAGR in the 2020-2023 financial year. Capitalizing on this growth, financial institutions such as Axis and ICICI have recently introduced their transactional trading funds (ETFs) that monitor some of the largest healthcare institutions in the market, including hospitals, diagnostics, and research firms. And pharmaceutical companies.
Renewed interest in the health sector comes at a time of intense need to strengthen India’s medical infrastructure, as well as the sharp growth of the health sector, which has grown at almost 22 percent CAGR since 2016.
Along with policy interventions and increasing government spending in the sector, many financial analysts are very optimistic about investing in the sector in the long run. Analysts also believe that drug funds are relatively stable compared to other themed funds. However, considering the impacts of the cycle and market revisions, the sector is expected to remain volatile in the short term and provide a crippling return compared to last year.
Extraordinary circumstances, extraordinary income
Although the healthcare industry is a solid, defensive sector compared to other themed funds, the Delhi-based investor warns against investing your funds in a particular theme. “These are extraordinary times, and although my investments in pharmaceuticals have yielded huge returns, they should only make up 5-10 percent of your portfolio. Once the situation returns to normal, incomes will decline. So, remember to allocate your money accordingly, ”he said.