Fund of Fortnight
R@hul Potu / 09 Jan 2025/ Categories: DSIJ_Magazine_Web, DSIJMagazine_App, Fund of Fortnight, MF - DSIJ Recommendation, Mutual Fund
Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.
This is our mutual fund recommendation. Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same. [EasyDNNnews:PaidContentStart]
Reason for recommendation
The Indian equity market has continued its downward trend from last September into the new year. However, one sector that has resisted this selling pressure is pharmaceuticals. In fact, it’s the only sector that has generated positive returns over the last month. This defensive sector has tailwinds that will enable it to continue outperforming, making the ICICI Prudential Pharma Healthcare and Diagnostics (PHD) Fund our top pick. The fund has delivered impressive returns across various timeframes.
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Over the last three months, it returned 5.17 per cent, outpacing the category average of 4.09 per cent. In the last year, the fund surged 45.58 per cent, surpassing the category average of 39.85 per cent. Its consistent performance underscores its ability to generate alpha across different market conditions. The fund employs a balanced and diversified market capitalisation strategy, focusing on Large-Cap stocks. As of November 2024, 40.27 per cent of its portfolio was allocated to large-cap stocks, providing stability. Mid-Cap stocks account for 24.96 per cent, balancing growth and risk.
The fund also allocates 32.04 per cent to Small-Cap stocks, targeting high-growth opportunities. In terms of holding, the fund has bet big on Sun Pharmaceutical Industries (13.77 per cent), Dr. Reddy’s Laboratories (8.48 per cent) and Cipla (7.94 per cent). These companies are market leaders with strong global presence and innovative product pipelines. The fund’s ability to generate alpha (4.86) surpasses the category average of 4.11. Its consistent outperformance, diversified market-cap allocation, and focus on high-growth pharmaceutical sectors make it an attractive option for high-risk investors as this is a sectoral fund. However, do not allocate more than 5 per cent of your portfolio to this fund.
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