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Overview
Healthcare mutual funds provide focused equity exposure to companies operating across healthcare and related industries.
Depending on the scheme, the portfolio may include pharmaceutical manufacturers, hospitals, diagnostic companies, contract research and manufacturing businesses, medical technology companies, and other healthcare-related firms.
Healthcare demand can have long-term structural drivers, but the stocks themselves remain exposed to regulatory, pricing, product, and valuation risks.
Explained
Healthcare mutual funds are sectoral or thematic equity schemes that concentrate on companies linked to healthcare.
Their investment universe can include:
Contract development and manufacturing companies
The exact portfolio depends on the individual scheme's mandate.
Explained
Fund managers identify companies that they believe can benefit from healthcare demand while maintaining the scheme's required sectoral or thematic exposure.
They may evaluate:
A domestic hospital operator, for example, has very different business drivers from an Indian pharmaceutical company that earns substantial revenue from overseas markets.
Suitability
Healthcare funds may suit investors who:
Investors should avoid assuming healthcare stocks are automatically defensive or low risk simply because healthcare services are essential.
Advantages
One fund can provide exposure to pharmaceuticals, hospitals, diagnostics, and other healthcare businesses.
Factors such as healthcare access, insurance penetration, chronic diseases, rising incomes, and medical spending can support long-term demand.
Healthcare companies can require specialised analysis of regulations, drug approvals, product pipelines, and pricing. Professional management can help investors navigate these complexities.
A fund can spread investments across several healthcare companies instead of depending on a single pharmaceutical or hospital stock.
Before you invest
Drug approvals, inspections, pricing regulations, and compliance requirements can materially affect healthcare companies.
Some Indian pharmaceutical businesses earn significant revenue overseas. Changes in international regulation, competition, or currency movements can therefore affect performance.
A pharmaceutical company's earnings can sometimes depend heavily on a limited number of products. Loss of exclusivity or increased competition can hurt profitability.
Healthcare stocks can trade at high valuations when investors become optimistic about the sector. Future returns still depend on the price paid.
A Healthcare Fund remains concentrated even if it owns many healthcare stocks. Industry-specific problems can affect several portfolio holdings simultaneously.
Taxation
Healthcare Funds generally qualify as equity-oriented mutual funds when they satisfy applicable tax requirements.
For qualifying units held for more than 12 months, gains are generally classified as long-term capital gains.
Long-term capital gains covered under Section 112A are generally taxed at 12.5% above the applicable annual exemption threshold.
Qualifying gains on units held for 12 months or less are generally treated as short-term capital gains and taxed at the applicable special rate under Section 111A.
Investors should check prevailing tax rules before redemption.
Step by step
Good to know
It is an equity mutual fund focused primarily on healthcare-related companies, subject to the individual scheme's investment mandate.
Not necessarily. Depending on the scheme, they can also invest in hospitals, diagnostics, medical devices, biotechnology, healthcare services, and related businesses.
No equity fund is risk-free. Healthcare Funds additionally carry sector concentration and regulatory risks.
Regulatory approvals, product launches, competition, pricing, research pipelines, manufacturing compliance, export demand, and currency movements can affect pharmaceutical companies.
Most open-ended Healthcare Funds generally permit SIP investing, subject to scheme conditions.
Recap
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FUND
₹596.3
1.58%19.66%
23.66%
17.79%
₹383.3
1.5%14.91%
23.09%
15.33%
₹51.64
1.4%18.26%
22.02%
15.24%
₹50.06
1.3%15.26%
21.74%
15.34%
₹37.19
1.79%14.45%
21.49%
12.06%
I
ICICI Prudential Healthcare Fund Direct GrowthEquity Healthcare₹46
0.97%5.31%
21.09%
15.32%
₹40.06
1.04%16.45%
20.99%
13.84%
T
Tata India Pharma & Healthcare Fund Direct GrowthEquity Healthcare₹38.89
0.89%7.98%
18.9%
14.06%
₹632.17
0.97%9.62%
17.64%
13.11%
₹18.92
1.55%17.38%
19.65%
N.A.
₹414.29
1.58%19.66%
23.66%
17.79%
₹296.26
1.5%14.91%
23.09%
15.33%
₹31.11
1.4%17.37%
21.18%
14.29%
₹28.95
1.3%15.26%
21.48%
14.8%
₹37.18
1.79%14.44%
21.47%
12.05%
I
ICICI Prudential Healthcare Fund Dir Reinvmt of Inc Dist cum Cap WdrlEquity Healthcare₹25.82
0.96%4.84%
20.49%
14.66%
₹26.05
1.03%16.14%
20.44%
13.34%
T
Tata India Pharma & Healthcare Fund Direct Rnvstmnt of Inc Dist cum Cap WdrlEquity Healthcare₹37.63
0.89%7.88%
18.87%
14.04%
₹173.01
0.97%9.02%
16.98%
13.47%
₹18.92
1.55%17.38%
19.65%
N.A.
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