Asset management company, Aditya Birla Sun Life AMC Ltd. has announced the launch of an open-ended exchange-traded fund (ETF) that will track Nifty Healthcare TRI (Total Return Index). The New Fund Offer (NFO) for Aditya Birla Sun Life Nifty Healthcare ETF opens on October 8 and closes on October 20.
The objective of the scheme is to ride the opportunities in the healthcare sector and generate long-term capital growth for the investors.
A Balasubramaniam, MD & CEO, Aditya Birla Sun Life AMC, said: “Healthcare has become one of the key sectors in India in terms of revenue, exports and job creation. This growth is reflected in the market performance of healthcare companies. The Nifty Healthcare index has risen more than 9 times from its base date as compared to the Nifty, which has gained 8 times in the same period. It has generated double digit returns in both short-term (three years) and long-term (10 years).”
According to Balasubramaniam, since ABSL Nifty Healthcare ETF is a passive fund, it minimizes investment cost, requires stock selection as well as offers the benefits of share-like trading.
The minimum application amount for this fund is ₹in multiples of 500 and ₹100, thereafter, during the NFO period.
The Nifty Healthcare Index comprises 20 exchange-listed companies from sectors such as pharma, hospitals, medical devices and supplies, laboratories and diagnostics as well as medical insurance. The index is formed on a free-float market capitalization method and is reconstituted semi-annually.
The index has given a return of 29.54% on a yearly basis.
In terms of constitution, almost pharma companies have a weightage of around 87% in the index, while healthcare companies have a weightage of 13%.
Sun Pharma Limited has the highest weightage of 17.65% in the index, followed by Divi’s Laboratories Limited (12.22%), Dr Reddy’s Laboratories Limited (11.85%), Cipla Limited (9.99%) and Apollo Hospitals Enterprise Limited (9.01%).
ICICI Prudential Asset Management Company Limited launched Nifty Healthcare ETF in May, which has given a return of 6.72% so far.
According to a recent NITI Aayog report, the healthcare industry has become one of the largest sectors of the Indian economy in terms of both revenue and employment. It has been growing at a compound annual growth rate (CAGR) of 22% since 2016, employing 4.7 million people directly. In addition, the sector has the potential to create 2.7 million additional jobs in India between 2017-22, with over five lakh new jobs per year.
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