SBI Healthcare Opportunities Fund

SBI Healthcare Opportunities Fund, an open-ended equity mutual fund scheme, aims to generate long term growth for its investors by investing in a diversified portfolio of equity and equity-related securities in the healthcare sector. It is a sectorial pharma equity fund.

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It holds a portfolio of pharmaceutical and other healthcare companies with high potential growth prospects, healthy financial strength, sustainable business models and affordable pricing that offers promise for wealth creation.

The Fund has 100% investment in Indian stocks, of which, among other things, 85.64% is in pharmaceutical stocks and 12.09% in healthcare services stocks. The fund objective is to generate alpha through superior stock selection.

SBI Healthcare Opportunities Fund is available in four plan categories:

  • Direct - Growth
  • Direct - IDCW 
  • Regular - Growth
  • Regular - IDCW  

In the case of Direct Plans, the investors acquire mutual fund units directly from the Fund. However, for Regular Plans, the investors have to acquire mutual fund units through distributor agents. 

Investment Details 

Parameter Details
Fund Name  SBI Healthcare Opportunities Fund
Fund House SBI Mutual Fund
Launch Date  05-Jul-1999
Benchmark S&P BSE Healthcare TRI
Type Open-Ended
Minimum Investment  Rs. 5,000/- Minimum Additional Investment: Rs.1,000/- Minimum SIP Investment: Rs.500/- Minimum SWP: Rs. 500/- 
Lock-in Period Not applicable
Entry Load Not applicable
Exit Load 0.5% for redemption within 15 days
Return Performance Average
Fund Consistency Average
Risk Level High

Fund Summary

  1. SBI Healthcare Opportunities Fund Direct Plan-Growth

      • Risk level-Moderate
      • NAV-Rs. 225.6968 as of 26.05.2021
      • Expense Ratio-2.27%
    • Fund Started-05.07.1999
  2. SBI Healthcare Opportunities Fund Direct Plan IDCW 

      • Risk level-Moderate
      • NAV-Rs. 142.1773 as of 26.05.2021
      • Expense Ratio-2.27%
    • Fund Started-05.07.1999
  3. SBI Healthcare Opportunities Fund Regular Plan-Growth

      • Risk level-Moderate
      • NAV-Rs. 247.2792 as of 26.05.2021
      • Expense Ratio-1.09%
    • Fund Started-01.01.2013
  4. SBI Healthcare Opportunities Fund Regular Plan IDCW 

      • Risk level-Moderate
      • NAV-Rs. 171.8043 as of 26.05.2021
      • Expense Ratio-1.09%
    • Fund Started-01.01.2013

    Fund Manager

    • Mr Tanmaya Desai (since January 2011)

Fund Returns Summary

SBI Healthcare Opportunities Fund Direct Plan-Growth - Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 23.74%
1 year 62.57%
2 years 42.43%
3 years 27.11%
5 years 12.11%
Since Inception 18.32%

SBI Healthcare Opportunities Fund Direct Plan IDCW - Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 23.74%
1 year 62.57%
2 years 42.43%
3 years 27.10%
5 years 12.12%
Since Inception 18.28%
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

SBI Healthcare Opportunities Fund Regular Plan-Growth - Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 23.05%
1 year 60.73%
2 years 40.88%
3 years 25.74%
5 years 10.83%
10 years 17.71%
Since Inception 15.21%

SBI Healthcare Opportunities Fund Regular Plan IDCW - Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 23.05%
1 year 60.73%
2 years 40.89%
3 years 25.74%
5 years 10.86%
10 years 17.73%
Since Inception 16.73%

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Summative Pros and Cons Table

Pros Cons
The Healthcare sector has outperformed the broader market and the large-cap companies since March 2020. It is the best performing sector in the ongoing COVID-19 pandemic environment. Such thematic funds cannot figure in the core equity portfolio on account of their high-risk characteristic.
Healthcare, being a defensive sector, is less impacted by economic cycles viz. boom, recession, slowdown, etc.). A portfolio allocation to defensive sectors adds to its stability. The expense ratio for Regular Plan at 2.27% is on the higher side compared to a diversified equity mutual fund.

Benefits of SBI Healthcare Opportunities Fund

Investment in SBI Healthcare Opportunities Fund can be beneficial to the investors for the following reasons:

  • Opportunities across the Healthcare value chain: The opportunity to invest in the healthcare sector encompasses companies across the healthcare value chain, including pharmaceuticals, hospitals and diagnostic companies. The Fund invests in pharmaceutical stocks that have a presence in India and some of the heavily regulated markets such as the USA, Europe, Brazil, Russia, South Africa, etc. The Fund can potentially invest in contract manufacturing companies that tie-up with the more prominent pharmaceutical companies focused on research and development. The Fund can invest up to 35% of the fund corpus in international healthcare companies.
  • Successful Track Record: A positive track record of more than three decades and a humungous experience of investing through various business cycles makes SBI Mutual Fund a very reliable Fund House. With a bottom approach to investing, the fund managers invest in companies having a reliable background, resilient fundamentals, top quality management quality and healthy financial strength.
  • Positive Outlook: The healthcare sector's short-term outlook is healthy on account of the COVID-19 pandemic. This is further boosted by PLI incentives (e.g. API parks) provided by the central government on the Active Pharmaceutical Ingredients (API) sector. It is expected that countries will increase healthcare spending in absolute amounts and as a percentage of GDP in the near future. This brings a lot of attractive business prospects to listed companies in the healthcare space.
  • Export Opportunity: India is likely to be a beneficiary of the ‘China plus One’ story as global pharmaceutical supply chains diversify their dependence on China. The shift of business from China to India, albeit gradual, will provide a significant opportunity for Indian companies to benefit from. This offers considerable scope for Indian companies in the healthcare sector to increase their revenue from exports.

Fund House Details

SBI Healthcare Opportunities Fund is housed under SBI Mutual Fund. It is established as a Trust, with the Trustee of the Fund being SBI Mutual Fund Trustee Company Private Limited. SBI Funds Management Private Limited is the SEBI-approved Investment Manager to the Schemes of SBI Mutual Fund. 

SBI Mutual Fund is sponsored by SBI or the State Bank of India. It boasts of being the largest Bank in India and has 63% shareholding in the Fund House. AMUNDI Asset Management holds the remaining 37% through the child subsidiary, Amundi India Holding. The Fund has a diverse product offering of more than 60 debt and equity investment schemes in its product basket. Fund managers manage the various fund schemes under Mr Rajeev Radhakrishnan (CIO – Fixed Income) and Mr R. Srinivasan (CIO – Equity).

Sponsor details of the Fund House are:

  1. State Bank of India: 63% holdings

    Mumbai based State Bank of India (SBI) is India's largest PSU bank. With total assets of Rs. Forty-five thousand three hundred forty-four billion at March 31, 2021, is a market giant and reliable Bank. The SBI has a massive branch network of more than 22,000 banks and 58,500 ATMs across India. Its market share is 25% of total loan and deposits and 23% by assets. SBI is ranked 43rd in the world amongst the banks in terms of size.

  2. Amundi India Holding: 37% holdings

    Amundi India Holding is a completely owned subsidiary of Amundi Asset Management, France. It is one of the 10 most giant investment managers by assets under management in the world. It is also the second-largest asset manager in Europe, with €1.729 trillion of AUM or assets under management, as reported in December 2020.

Who Should Invest in SBI Healthcare Opportunities Fund?

SBI Healthcare Opportunities Fund, being a thematic fund, is best suited for investors who seek: 

  1. Healthcare Sector Opportunities

     The Fund is a thematic fund formed to generate long-term capital growth by investing in a diversified portfolio of equity and equity-related securities across the healthcare value chain, including pharmaceuticals, hospitals and diagnostic companies. Equity funds, inherently, are meant for long-term wealth creation, and one needs to stay invested in equity for a period over five years. Nevertheless, investors may seek expert opinion from their advisers before investing in a thematic fund, keeping in mind its suitability to its financial goals.

  2. Long Term Wealth Creation

    The Fund is categorized as ‘high risk’ and would be prone to a prolonged downtrend in NAV in periods of slowdown. Hence, it is suited for investors who are willing to wait for the long haul. Thematic funds are very successful only in some years and tend to be a flavour of the season in these years. It is suggested to exercise abundant caution while opting for investment in such types of thematic funds. An investor should limit the investment in theme-based funds such as SBI Healthcare Opportunities Fund to 5%-10% of the equity portfolio.

Conclusion

India’s pharmaceutical sector has been a prime export earner for the country, alongside the information technology sector. The future medium-term outlook of the sector seems bright because of the focus of many governments to increase their healthcare spending. An investor may allocate not more than 5%-10% of one's equity funds to this thematic Fund.

FAQ's

  • Q: Should I invest in SBI Healthcare Opportunities Fund for my child’s post-graduation?

    Ans: While investing in a thematic mutual fund, one should invest for at least 5 years for the investment to generate healthy returns. Thematic funds, in general, depend on the overall prospects of the sector and the performance of the underlying companies. Such funds generate alpha only over the long term. Further, in the event of a sector downturn, the companies in the entire portfolio may get adversely affected. An investor should allocate not more than 5%-10% of one’s equity funds to such thematic funds. Hence, it is not advisable to invest in SBI Healthcare Opportunities Fund for one’s child’s post-graduation, although it is a long term goal.
  • Q: Should I invest in the Direct Plan or Regular Plan of the SBI Healthcare Opportunities Fund?

    Ans: Direct plans earn higher returns than Regular Plans on account of a lower expense ratio. However, analyzing the performance of a mutual fund and checking its compatibility with an investor’s financial goals and risk profile demands informed knowledge and experience. An advisor, being a professional, is in a position to guide the investor in selecting the right Fund. Also, an individual investor may not have the patience, time, or wherewithal to review the portfolio regularly to check the alignment with the financial goals. A thematic fund, such as SBI Healthcare Opportunities Fund, demands a degree of awareness about mutual funds and the underlying theme, i.e. healthcare sector. Investors not confident of managing the above issues are advised to consider investing in the Regular plan.
  • Q: Should one invest in SBI Healthcare Opportunities Fund through a SIP or as a lump sum?

    Ans: An investor with an investment horizon of 3 to 5 years may invest in SBI Healthcare Opportunities Fund in a lump sum. If one is willing to have a longer investment horizon of more than 5 years, one may look at investing in the Fund using the Systematic Investment Plan or the SIP route.
  • Q: From where can I get information about the performance of the SBI Healthcare Opportunities Fund?

    Ans: Interested individuals can visit the SBI Mutual Fund portal for comprehensive information about any type of Fund. One gets data related to the SBI Healthcare Opportunities Fund’s performance against its benchmark, S&P BSE HealthCare TRI. The portal also provides information such as the CAGR Performance and Current Value of Standard Investment over the last one, three, or five years since the Fund's inception.
  • Q: What are the income tax implications of investing in the SBI Healthcare Opportunities Fund?

    Ans: The capital gains earned from selling the Fund units are taxed depending on the period of investment. If the investments are sold before completing 1 year of holding, the gains are categorized as short term capital gains and income tax @15% is payable on short term capital gains. On the other hand, if investments are sold after holding for more than a year, the gains are classified as long term capital gains. In a financial year, cumulative long term capital gains of up to Rs.1 lakh are exempt from income tax. After breaching the limit of Rs.1 lakh, income tax @10% is payable on the long term capital gains.
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