Mutual Fund Review: Should You Invest in Quant MF’s Healthcare Fund?

Quant MF’s Healthcare Fund: Investors should choose the Quant Healthcare Fund based on their personal investing objectives and risk tolerance. Historically, the healthcare industry has been an excellent long-term investment, but it has also been volatile in the near term.

Quant Healthcare Fund (QHF) subscriptions commenced on June 27 and will conclude on July 11, Quant Mutual Fund, which has roughly Rs 18,500 crore in assets under management (AUM), has created a healthcare fund that focuses on life sciences, insurance, and wellness industries.

Quant Healthcare Fund (QHF) subscriptions commenced on June 27 and will conclude on July 11. This is the fund house’s second sectors vehicle in a week, after the Quant BFSI Fund, which debuted on June 20.

According to Sandeep Tandon, Quant MF’s founder and chief investment officer, they decided early this year to establish various funds based on their in-house business cycle insights.

“This is a great chance to launch sectoral or themed product funds.” The markets may fall at any time, and the first industry likely to emerge following a drop is BFSI. Following that, healthcare will emerge, followed by technology and manufacturing. “We intend to launch four to five sectoral themes by August-September,” Tandon added.

Quant MF’s Healthcare Fund

Quant MF's Healthcare Fund

At least 80% of the funds will be invested in healthcare, life sciences, insurance, and wellness industries. Pharmaceuticals, biotech, hospitals, medical devices, diagnostic services, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, medical equipment, medtech, and so on are examples of these.

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The scheme’s benchmark would be the S&P BSE Healthcare TRI, and it would invest across market capitalisations to improve risk-return payoffs.

According to the fund manager, VLRT (value, liquidity, risk appetite, and time), their risk-mitigating investing approach, and predictive analytics technologies will be used to dynamically manage known risks and discover opportunities throughout the portfolio.

Tandon, Ankit Pande, Sanjeev Sharma, and Vasav Sahgal will be the scheme’s fund managers.

In addition to the new fund, Pande, Sharma, and Sahgal manage 14-15 programmes at the fund company.

What Works

The pharmaceutical industry is one of the most promising in India, with the medical tourism market estimated at $2.89 billion in 2020 and predicted to grow to $13.42 billion by 2026.

According to brokerage Sharekhan, Indian pharmaceutical businesses are better positioned to capitalise on prospects since they are competitive worldwide and have a sizable market share in most areas.

“In the short-medium term, cost pressures, in addition to increased USFDA (Food and Drug Administration) regulatory risk, which can slow down new product launches and likely increase remedial costs, could act as headwinds to sales and profit growth.” As a result, we are neutral in the sector in the short to medium term. “However, we believe this points to a strong long-term growth potential for Indian pharma companies,” it stated.

According to Value Research statistics, pharma funds have provided 16.30 percent (three-year) and 15.95 percent (five-year) long-term returns, which are lower than other sectors funds such as technology and banking.

However, in the short term, pharma has been among the top performing categories overall, with one-month returns of 7.04 percent and three-month returns of 15.44 percent.

What doesn’t work?

In recent years, healthcare has been one of the most volatile industries. Following a year of significant underperformance, pharma rebounded in 2020 as a result of the Covid-induced surge. However, the calendar years 2021 and 2022 were once again unfavourable for the sector.

According to Sharekhan, unfavourable regulatory developments, delays in plant inspections, and currency volatility may outweigh the financial success of sector businesses in the short term.

Because the pharmaceutical industry is cyclical, timing your entry and exit is critical.

“The healthcare industry is large and diverse, with companies operating in a variety of sub-sectors.” The investing approach of the fund will define which sub-sectors it invests in,” said Money Mantra founder Viral Bhatt.

Investors should choose the Quant Healthcare Fund based on their personal investing objectives and risk tolerance. Historically, the healthcare industry has been an excellent long-term investment, but it has also been volatile in the near term.

Keep in mind that the fund’s previous performance is not always predictive of its future performance.

“Investors seeking a long-term investment in the healthcare sector should consider the Quant Healthcare Fund.” They should, however, be aware of the hazards involved and conduct their own research before investing,” added Bhatt.

In terms of overall portfolio diversity, most individual investors can get by with a large-cap or flexi-cap fund. In terms of pharma funds, established schemes with a proven track record and recognised portfolio development are preferable.

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