Retail investors may skip Aditya Birla SL Mutual Fund's pharma NFO

Investors could stay away from the new fund offer (NFO) of Aditya Birla Sun Life Pharma and Healthcare Fund, said investment advisors. This is the fifth new fund offer in the pharma and healthcare space in the last one year.

This NFO comes when pharma sector returns have disappointed investors. MFs including ICICI Prudential, Mirae Asset, DSP and IDBI have launched their NFOs in the last one year and there are now nine schemes investing in the pharma sector. Returns from the sector have been subdued in the last three years as drug makers grapple with compliance issues and pricing pressures.

As per data from Value Research, the pharma sector has lost 5.15% in the last one year and 2.38% over the last three years.


Aditya Birla Sun Life Pharma and Healthcare Fund, which will be managed by Dhaval Shah will close for subscription on July 5. The scheme will invest in allied segments like hospitals and diagnostics, wellness businesses or the global contract research and manufacturing services industry in addition to drug makers. The fund will pick up international pharma companies which have businesses that are not available in India.

The fund manager is betting on a revival in exports. With valuations 20% below long-term averages, the fund is looking for value picks. Financial planners said investors should stay away from sectoral funds and NFOs which do not have a track record.

“Sector funds take concentrated bets and are meant for informed investors. Retail investors could stay away and build their portfolios through diversified equity MFs,” says Vijay Kuppa, founder, Orowealth.