ICICI Prudential AMC launched a new mutual fund scheme on 25th June 2018 called – ICICI Prudential Pharma Healthcare And Diagnostics (P.H.D) Fund-Direct Plan. The NFO opened on 25th June 2018 and it will close for subscription on July 9th, 2018. The scheme will be managed jointly by Mr. Ihab Dalwai and Ms. Priyanka Khandelwal.

ICICI Prudential P.H.D Fund can help investors participate in core non-discretionary healthcare sectors by investing in pharmaceuticals, hospitals, diagnostics, preventives, health insurance and allied sectors

It is an open-ended, sectoral equity oriented mutual fund scheme and can be subscribed or redeemed on any working day. Let’s look into this new NFO in detail.

ICICI Prudential P.H.D Fund-Direct Plan NFO: Facts

ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) Fund is an open-ended equity scheme which aims to improve health opportunities into wealth creation opportunities.

NFO Name ICICI Prudential Pharma Healthcare And Diagnostics (P.H.D) Fund – Direct Plan NFO
NFO Launch Date 25th June, 2018
Last Date for Application 9th July, 2018
Minimum Investment Amount ₹5000 and in multiples of Re. 1 thereafter
Fund Type Equity – Sectoral fund
Nature Open-ended fund
Mutual Fund House ICICI Prudential Mutual Fund
Fund Manager Mr. Ihab Dalwai and Ms. Priyanka Khandelwal
Benchmark S&P BSE Healthcare TRI

This is a high-risk fund and exit load for this scheme is set at 1% for redemption within 540 days.

How to Invest in ICICI Prudential P.H.D Fund-Direct Plan NFO 2018

Log in to your Groww account. If you are a new user, sign up first– it is completely online and takes 2-3 working days. If you want to invest in ICICI Prudential P.H.D Fund-Direct Plan NFO, you have to follow the steps below.

1.Decide the amount you would like to invest in ICICI Prudential P.H.D Fund-Direct Plan NFO.

2.Email Groww support on support@groww.in with a request or call/Whatsapp on 9108800604.

When investing in this NFO, you must remember, it is an open-ended mutual fund.

ICICI Prudential P.H.D Fund-Direct Plan NFO: Objective

The Fund aims to make investors participate in the core, non-discretionary healthcare sector by investing in Pharmaceuticals, Hospitals, Diagnostics, Preventives, Health Insurance and allied sectors. India is one of the fastest growing healthcare markets in the world, and increasing awareness, improving government expenditure and private investments make this scheme a long-term option for investors.

However, there is no assurance that the investment objective of the scheme will be realized and the scheme does not assure or guarantee any returns.

ICICI Prudential P.H.D Fund-Direct Plan NFO: Fund Category

ICICI Prudential P.H.D Fund-Direct Plan is an equity oriented mutual fund scheme. In equity fund category, it is a sectoral fund type with a focus on the Indian Pharma sector.

Which means, this NFO will invest in stocks of companies that operate in Indian pharma sector, healthcare, hospitals and diagnostics. The Ideal investment duration for these type of funds are not fixed and differs with the sector chosen for investment.

Also, ICICI Prudential P.H.D Fund-Direct Plan is an open-ended mutual fund scheme.

Open-ended funds are schemes that offer mutual fund units to the investors on a continuous basis. This means that the investors can buy units from, or sell units to the fund house at any time, thereby making the corpus of the fund variable. These funds also do not have a fixed maturity period.

ICICI Prudential P.H.D Fund-Direct Plan NFO: Plans Available

The scheme offers the following plans: Regular Plan and Direct Plan.

Both the regular and direct versions of any mutual fund are the exact same fund, run by the same fund managers investing in the same stocks, and bonds.

The difference is that in case of direct mutual funds, there is no broker/distributor commission. Which means, as an investor, you get higher returns from the exact same mutual fund.

Read More: Direct vs Regular Mutual Funds Examples: Returns of Top 10 Funds Compared

These Plans further offer the following options:

1.Growth Option

2.Dividend Option

The frequency of dividend option is daily, weekly and monthly. If no option is indicated in the application form the default option will be the Growth Option.

ICICI Prudential P.H.D Fund-Direct Plan NFO: Asset Allocation

The asset allocation of this liquid fund is as follows:

Type of Instruments Normal Allocation (% of Net Assets) Risk Profile
The stocks of pharma, healthcare, diagnostics, wellness and other allied companies 80-100% High
The stocks related instruments of other than pharma, healthcare, diagnostics, wellness and allied companies. 0-20% Medium to High
Debt, Units of Mutual Fund schemes, Money market instruments, Cash and Cash Equivalent. 0-20% Low to Medium

ICICI Prudential P.H.D Fund-Direct Plan NFO: Benchmark

The fund will be benchmarked to S&P BSE Healthcare Index.This benchmark will be able to give a true and accurate comparative analysis of the performance of the Scheme

S&P BSE Healthcare index was trading positive following the major benchmark indices during Wednesday’s trade (27th June 2018). BSE Healthcare index was trading up by 1.46% at 13,765 level on BSE. Whereas, the major benchmark indices Sensex was trading up by 125 points at 31,625 level and Nifty was trading up by 42 points at 9,901 level.

Sun Pharmaceuticals, Natco Pharma, Dr Reddy’s Laboratories, Aurobindo Pharma, Cipla and Divi’s Laboratories were contributing majorly to the index gaining.

ICICI Prudential P.H.D Fund-Direct Plan NFO: Fund Managers

This fund will be jointly managed by:

Mr. Ihab Dalwai

Education: Mr. Dalwai is a Chartered Accountant.

Experience: He is associated with ICICI Prudential AMC since April 2011.

Funds Managed:

Ms. Priyanka Khandelwal

Ms. Priyanka Khandelwal will be managing overseas investment of this scheme.

Education: Ms. Khandelwal is Chartered Accountant and Company Secretary

Experience: She has been Working with ICICI Prudential Mutual Fund Since October 2014.

Funds Managed:

  • ICICI Prudential Value Fund – Series 15 – since Jun 2017
  • ICICI Prudential Multiple Yield Fund – Series 14 – Plan A – 1228 Days – since Feb 2018
  • ICICI Prudential Bharat Consumption Fund – Series 1 – since Mar 2018
  • ICICI Prudential Bharat Consumption Fund – Series 3 – since Jun 2018

ICICI Prudential P.H.D Fund-Direct Plan NFO: Minimum Investment

This scheme is available for lump sum and SIP options:

1.Minimum investment is ₹5,000 and in multiples of ₹1 there-off for lump sum investments.

2.Minimum SIP investment is ₹1,000 per month and minimum SIP tenure is 6 months.

3.Minimum Systematic Withdrawal Plan (SWP) is ₹500.

4.There is no maximum amount of investment

5.The NAV of the NFO is ₹10 per unit now during initial subscription.

ICICI Prudential P.H.D Fund-Direct Plan NFO: Risk

ICICI Prudential P.H.D Fund-Direct Plan NFO falls in the High-risk category as per the company scheme information document indicating that the principal invested by the investors will be at high risk.

This mutual fund scheme is a sector-specific mutual fund scheme. Since sector funds are exposed to a single sector and fewer number of stocks, they tend to carry higher risk as compared to a diversified equity mutual fund. The fund manager does not have much leeway to move away from the sector, even if its performance deteriorates.

The risk in sectoral funds comes from different sources and three most important risks are as follows:

1.Market Risk

This reflects the correlation between the stock market volatility and the Mutual Fund Performance. The performance of an equity oriented fund will be affected with changes in the stock market, and this type of risk is unavoidable for an equity oriented fund. Pharma and Healthcare sectors are underperformers in the last couple of years. If you observe, some of these mutual funds gave negative returns in the last 2-3 years

2.Liquidity Risk

If one particular scheme is not performing well, the fund house may face difficulties in finding buyers. Therefore, this drastically increases the risk factor as well.

3.Credit Risk

This reflects the risk that the company in which the mutual fund invested the corpus will default on the repayment, thereby affecting the investors’ return.This fund invests up to 20% in debt instruments. Certain corporate debt instruments carry credit risk and there could be a downfall in such instrument ratings and values.

Investors should bear this risk in mind before investing in this funds.

ICICI Prudential P.H.D Fund-Direct Plan NFO: Salient Features

ICICI Prudential P.H.D Fund will invest in three broad themes – within each them, there are multiple sub-sectors.

1.Remedial Healthcare: Sub-sectors are Hospitals, Diagnostics and Pharma

2.Preventive: Fitness, Health Food & Beverages and Vaccinations

3.Health Insurance: Medical insurance

ICICI Prudential P.H.D Fund-Direct Plan NFO: AMC Details

ICICI Prudential Asset Management Company Ltd. is a leading asset management company (AMC) in the focused on bridging the gap between savings & investments and creating long-term wealth for investors through a range of simple and relevant investment solutions.

The ICICI Prudential AMC is a joint venture between ICICI Bank, a well-known and trusted name in financial services in India and Prudential Plc, one of UK’s largest players in the financial services sectors.

The AMC manages significant Assets under Management (AUM) in the mutual fund segment. The AMC also caters to Portfolio Management Services for investors, spread across the country, along with International Advisory Mandates for clients across international markets in asset classes like Debt, Equity and Real Estate.

The AMC has witnessed substantial growth in scale, from 2 locations and 6 employees at the inception of the joint venture in 1998, to a current strength of 1913 employees with a reach across over 200 locations reaching out to an investor base of more than 3 million investors (As on March 31, 2018). The company’s growth momentum has been exponential and it has always focused on increasing accessibility for its investors.

Driven by an entirely investor centric approach, the organization today is a suitable mix of investment expertise, resource bandwidth and process orientation. The AMC endeavors to simplify its investor’s journey to meet their financial goals, and give a good investor experience through innovation, consistency and sustained risk adjusted performance.

ICICI Prudential mutual fund schemes, endeavors to simplify its investor’s journey to meet their financial goals, and give a good investor experience through innovation, consistency and sustained risk-adjusted performance.

Key Reasons to Invest in ICICI Prudential P.H.D Fund-Direct Plan NFO

The key advantages of ICICI Prudential P.H.D Fund-Direct Plan NFO are:

1.Sectoral fund depends on how the whole sector going to perform in future. India has one of the fastest growing healthcare markets in the world.

2.Rising income levels, increased health awareness, improvement in treatment technologies, increasing penetration of health insurance has made healthcare sector as one of the fastest growing sector in the country.

3.AMCs in India are increasingly viewing pharma as a contrarian bet whose time has come. However, they are hedging those bets by giving their funds a broader remit with healthcare and allied stocks also within the ambit.

Hence, this NFO is suitable for those who are ready for long-term wealth creation by investing predominantly in pharma, healthcare, hospitals, diagnostic, wellness and allied companies.

Alternative Options

Mutual fund advisers typically do not recommend sector schemes to investors. Sectors funds are meant for sophisticated investors with intimate knowledge about the sector and with a high risk appetite. Advisers also believe that investors should opt for established schemes rather than investing an NFO without a performance record.

So, if you think ICICI Prudential P.H.D Fund-Direct Plan NFO is too risky for you, you can invest in already existing sectoral-pharma schemes.

3 Best Liquid Funds Available In The Market Are :

1. Reliance Pharma Fund

This is the best rated fund in pharma-sectoral mutual fund category and has given 20.9% return since its launch of June 5th, 2004. You can invest in this scheme with a minimum SIP of ₹100 only.

Performance Over The Years:

Duration Returns
1 year  14.9%
3 years  3.7%
5 years  17.2%

This fund aims to generate consistent returns by investing in equity or fixed income securities of pharma and other associated companies. This is the only fund in pharma sector fund category, to show positive returns in last 2-3 years, when whole sector was down.

2. SBI Healthcare Opportunities Fund 

The scheme seeks to provide the investors with the opportunity of long-term capital appreciation by investing in a diversified portfolio of equity and equity related securities in Healthcare space and has given 13.75% returns since its launch on 1st January 2013.

Performance Over The Years:

Duration Returns
1 year  -5.7%
3 years  -4.9%
5 years  14.5%

3. UTI Healthcare Fund

Since its launch, this fund has given 11.60% returns on an average. Since for last 2-3 years, the pharma sector in India are bleeding red, the same can be seen from its recent performance of this fund.

Performance Over The Years:

Duration Returns
1 year  1.2%
3 years  -2.8%
5 years  12.2%

The aim of this fund is to invest in companies engaged in the research, manufacture or marketing of OTC products, bulk drugs and formulations

Conclusion

Pharma and Healthcare segment has been an evergreen sector over a decade where they have been posting double-digit growth. However, due to stiff competition from US Drug makers, Indian drug exports have declined by 5% YoY last year.

We have been seeing this in the last couple of years in terms of performance of pharma stocks. This could cause some pressure to pharma stocks in future too.

But ICICI Prudential P.H.D Fund-Direct Plan NFO scheme also invests in health care and diagnostic segments, which includes hospitals, diagnostics, wellness companies etc. where they is high growth potential. If you wish to take good investment opportunities for pharma and healthcare sector and willing to take high risk, investors can invest in this new mutual fund scheme for long-term of  5-7 years.

Investors who are planning to start invest in mutual funds must have basic knowledge. There are a lot of factors you should look into before selecting a mutual fund scheme which will match your investment goals.

Read More: 10 Secrets Only Successful Mutual Fund Investors Know

Investing in mutual funds online is very simple and paperless. Simply log in to your Groww account, choose a fund, and invest using net banking – exactly like you would when shopping online.

To look at some of the best performing funds from every category of mutual funds, check out Groww 30: Top funds in every mutual fund category. 

Happy Investing!

Disclaimer: the views expressed here are of the author and do not reflect those of Groww.