Ashok Kumar, theIPOguru, is a man of few words. So, when he speaks, investors and particularly those chasing the IPO Rainbow with
the proverbial 'pot of gold' at the end of it, listen carefully.
Once again Pharma sector stocks which had underperformed the broader markets in the past quarter have hogged the limelight with recent gains in their stock prices on the back of increasing growth opportunities for their businesses. Resultantly, Pharma funds have benefited in terms of performance.
Sr.No.
Scheme Name
1 Year %
3 Months %
1 Month %
1
Franklin Pharma Fund
149.3
12.1
8.1
2
Reliance Pharma Fund
163.2
11.3
9.3
3
UTI Pharma & Health Fund
91.8
10.9
9
4
SBI Magnum Pharma Fund
119.7
3.9
7.3
Sensex
76.4
1.4
7.4
BSE Healthcare
99.5
5.8
8.5
**Figures as on 29th March 2010.
Strong demand for generics world over especially in the US and back home will enable the Indian Pharma (generic drug manufacturing companies and formulation business) companies to ride high on the growth momentum.
The US Healthcare bill is primarily focused on reducing healthcare costs in the US and adding additional 32 million uninsured Americans which provides a fillip to the usage of low cost generic drugs as well as increase in the market for drugs.
Notably, amongst the pharma sector funds Franklin and Reliance Pharma Funds have been the out performers and have registered decent growth by excelling their performance against their benchmarks and most sector funds.
Franklin Pharma Fund’s, portfolio analysis indicates that the fund invests largely in Pharma companies focusing on generic drugs. The caveat remains in the negative Sharpe Ratio and small size of the Asset Under management. Investors may consider booking profits for now.
While the Reliance Pharma Fund’s holding primarily comprises Indian companies and those focused on the Generic drug business and CRAMS segment, it has very limited exposure to MNC’s from this space. A beta of less than one indicates that the fund is well insulated from the market vagaries. However, investing in this fund would be recommended for investors with a high risk appetite, given a relatively low Sharpe Ratio. Those invested may continue to hold.
