Pharma and Healthcare Funds Show Signs of Recovery: Is Now the Right Time to Invest?
Pharma, healthcare funds are in recovery mode. Should you enter them now?
Business Standard
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Pharma and healthcare funds have rebounded with an 8.3% gain over the last three months, following a -2.9% return in 2025. Fund managers highlight growth opportunities in domestic and export markets, but caution investors about high valuations and potential risks from crude oil prices and regulatory changes. Investors should consider their risk appetite and investment horizon before entering these funds.
- 01Pharma and healthcare funds have gained 8.3% in the last three months after a poor performance in 2025.
- 02Fund managers see growth driven by domestic and export markets, with opportunities in generics and CRDMOs.
- 03High crude oil prices and regulatory changes in the U.S. pose risks to profitability.
- 04Investors should consider a disciplined approach, using SIPs to manage entry costs.
- 05Existing investors should evaluate their exposure and consider booking profits if over 10%.
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Pharma and healthcare funds have shown a significant recovery, achieving an 8.3% return over the past three months and 14.7% over the past year, following a disappointing -2.9% return in 2025. Fund managers, such as Kamal Gada from UTI Asset Management Company, point to growth in domestic formulations and opportunities from generic launches, particularly with the expiration of patents like Novo’s semaglutide. However, challenges remain, including high crude oil prices that could pressure margins and the impact of U.S. regulatory policies on drug pricing. Investors are advised to approach these funds with caution; new investors should consider using the systematic investment plan (SIP) method to average out costs, while existing investors should assess their exposure and hold if they have a long-term horizon. The general recommendation is to limit exposure to around 10% of total equity investments. Understanding the sector's complexities is crucial for those looking to invest in pharma and healthcare funds.
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Investors looking to enter pharma and healthcare funds may benefit from potential growth, but should be cautious of market volatility and external economic factors affecting profitability.
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