Fund of Fortnight
Ninad RamdasiCategories: 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.
Reason for recommendation
In Q2 FY24, the S&P BSE Healthcare Index demonstrated a 9 per cent outperformance over the S&P BSE Sensex. The healthcare sector shows promise with favourable conditions in the US generics market, a robust domestic formulations segment, and normalized input costs. Improved profitability is anticipated, driven by a stable domestic business, strategic product launches in the US, and ongoing cost optimization efforts. Against this backdrop, we recommend considering investment in the UTI Healthcare Fund. With Assets Under Management (AUM) of ₹765 crore, the fund has consistently outperformed its benchmark and category across various trailing periods, spanning from 1 year to 10 years. Furthermore, its 1-year rolling returns, distributed over 5 years, stand at 19.7 per cent, outperforming the S&P BSE Healthcare Total Returns Index (TRI) benchmark, which is at 18.3 per cent. The fund has a track record of delivering returns exceeding 10 per cent in a one-year period 60 per cent of the time. Regarding risk, UTI Healthcare Fund exhibits lower risk as measured by standard deviation and beta, outperforming its category average. Favorable risk-adjusted return metrics, including Sharpe and Sortino ratios, contribute to the fund's appeal.
The fund expresses optimism towards stocks such as Sun Pharmaceutical, Cipla, Dr Reddy's Laboratories, and Apollo Hospitals Enterprise. As a sectorfocused fund, it has a concentrated exposure to the healthcare sector, yet the individual stock concentration is welldistributed, with the top 10 stocks driving 58 per cent of its portfolio returns. We recommend considering UTI Healthcare Fund for your satellite portfolio, emphasising its tactical allocation rather than inclusion in financial goals. Investors with conservative and moderate risk profiles are advised to approach this fund with caution and may choose to avoid it in their investment strategy.
