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Aditya Birla Sun Life Mutual Fund launches Nifty healthcare ETF

The objective of the Aditya Birla Sun Life Mutual Fund's healthcare ETF is to ride the opportunities in the healthcare sector and generate long-term capital growth for investors. Photo: Ramesh Pathania/Mint Premium
The objective of the Aditya Birla Sun Life Mutual Fund's healthcare ETF is to ride the opportunities in the healthcare sector and generate long-term capital growth for investors. Photo: Ramesh Pathania/Mint 

  • The Nifty Healthcare Index comprises 20 exchange-listed companies from fields such as pharma, hospitals, medical devices and supplies, laboratories and diagnostics as well as medical insurance

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Asset management company, Aditya Birla Sun Life AMC Ltd, has announced the launch of an open-ended exchange-traded fund (ETF) that will track the Nifty Healthcare TRI (total return index). The new fund offer (NFO) for Aditya Birla Sun Life Nifty Healthcare ETF opens on 8 October and closes on 20 October.

The objective of the scheme is to ride the opportunities in the healthcare sector and generate long-term capital growth for investors.

A. Balasubramanian, MD and CEO, Aditya Birla Sun Life AMC said: “Healthcare has become one of India’s core sectors, in terms of revenue, exports and employment generation. This growth is reflected in the market performance of healthcare companies. The Nifty Healthcare Index has grown more than 9 times from its base date vis-à-vis Nifty, which has grown 8 times in the same period. It has generated double-digit returns in both short-term (three years) and long-term (10 years)."

As per Balasubramanian, since ABSL Nifty Healthcare ETF is a passive fund, it minimizes the investing cost, need for stock selection as well as offers the benefit of share-like trading.

The minimum application amount for this fund is 500 and in multiples of 100, thereafter, during the NFO period.

The Nifty Healthcare Index comprises 20 exchange-listed companies from fields such as pharma, hospitals, medical devices and supplies, laboratories and diagnostics as well as medical insurance. The index is constituted on a free-float market capitalization method and is reconstituted semi-annually.

The index has delivered a return of 29.54% on a yearly basis.

In terms of constitution, about pharma companies have about 87% weightage in the index, while healthcare companies have 13% weightage.

Sun Pharma Ltd has the highest weightage of 17.65% in the index, followed by Divi's Laboratories Ltd (12.22%), Dr. Reddy's Laboratories Ltd (11.85%), Cipla Ltd (9.99%) and Apollo Hospitals Enterprise Ltd (9.01%).

ICICI Prudential Asset Management Co. Ltd in May had launched Nifty healthcare ETF, which has delivered 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 compounded annual growth rate (CAGR) of 22% since 2016, employing 4.7 million people directly. Moreover, the sector has the potential to generate 2.7 million additional jobs in India between 2017-22, over five lakh new jobs per year.

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