NFO Insight: Baroda BNP Paribas Health and Wellness Fund opens. Is it the right prescription for your portfolio?
's latest
new fund offer
, the
Baroda BNP Paribas Health and Wellness Fund
, is open for subscription and will close on June 23. This open-ended equity scheme will focus on companies expected to benefit from the rising demand in
healthcare
and wellness—an emerging megatrend both in India and globally.
The fund aims to capitalise on the multi-decade structural growth story within the healthcare and wellness space.
CEO comments on fund launch
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'Over the last century, average life expectancy in India has more than tripled. Across every life stage—from toddler to septuagenarian—there is a constant need and expenditure towards well-being. Given the low starting base of per capita healthcare spending, we view this sector as a multi-decadal opportunity offering promising prospects for investors,' said Suresh Soni, CEO, Baroda BNP Paribas AMC.
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'India offers a $200 billion market cap opportunity with over 100 investible companies across pharma, diagnostics, Medtech, hospitals, insurance, and healthcare research,' said Sanjay Chawla, CIO – Equity, Baroda BNP Paribas AMC.
The primary objective of the scheme is to provide long-term capital appreciation by investing predominantly in equity and equity-related instruments of pharma and healthcare companies.
The fund will be benchmarked against the BSE Healthcare Total Return Index and will be managed by Sanjay Chawla.
This thematic fund is suited for investors with an investment horizon of three years or more. It offers an opportunity to participate in India's growing health consciousness and invest in an evolving ecosystem of wellness-focused businesses.
Sector Expected to Grow
While India's current per capita healthcare expenditure is significantly lower than that of developed markets, it is expected to grow exponentially. Key drivers include rising affordability, increasing awareness, longer life expectancy, and a higher incidence of chronic diseases, according to a press release.
Experts' Take on the New Launch
Experts typically advise caution when it comes to investing in New Fund Offers (NFOs), unless the scheme offers something genuinely unique—such as access to an untapped investment theme or an enhanced proposition over existing options. Without a historical performance record, investors may find it difficult to make informed decisions.
According to one expert, there are already over 10 pharma and healthcare-focused
mutual funds
available in the market. However, this new fund may adopt a distinct approach in terms of stock selection, portfolio construction, or focus on sub-segments like diagnostics, CDMOs, wellness, or healthcare services—potentially offering a fresh perspective within the broader theme.
'As with any new fund, it does not yet have a performance track record. So, while the investment philosophy might be compelling, it's sensible to monitor how the portfolio evolves and how the fund navigates different market conditions,' said Sagar Shinde, VP of Research at Fisdom, in a note to ETMutualFunds.
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'There's no pressing need to rush into the
NFO
. Given the ample choices already available in this category with proven track records, it's better to wait, watch how this fund shapes up, and then consider it for investment based on merit,' Shinde added.
Another expert shares a different opinion on this new fund as she mentions that Baroda BNP Paribas Health and Wellness Fund is not the first of its kind in India as several healthcare and pharma-focused funds are already in the market but what differentiates each fund is its investment approach, stock selection, and how broadly it defines the healthcare ecosystem—some include wellness, diagnostics, hospitals, and even health-tech platforms.
'Baroda BNP Paribas fund offers investors another opportunity to tap into India's growing healthcare story. It's worth considering for those looking to increase sectoral exposure, especially from a long-term perspective. Like any sectoral fund, it should be evaluated based on investment horizon, portfolio strategy, and alignment with personal financial goals,' Shruti Jain, Chief Strategy Officer, Arihant Capital Markets shared exclusively with ETMutualFunds.
The minimum amount for lump sum investment is Rs 1,000 and in multiples of Re 1 thereafter. For Systematic Investment Plans with daily, weekly, or monthly frequency, the minimum SIP amount is Rs 500 and in multiples of Re 1 thereafter; for quarterly SIPs, the minimum amount is Rs 1,500 and in multiples of Re 1 thereafter.
The fund will allocate 80–100% in equity and equity-related instruments of companies in the pharma, healthcare, and allied sectors; 0–20% in equity and equity-related instruments of companies other than those in the pharma, healthcare, and allied sectors; 0–20% in debt and money market instruments; 0–10% in units of mutual funds (domestic schemes); and 0–10% in units issued by REITs and InvITs.
Time to allocate in this sector?
Shinde advises that in pharma, recent corrections have created better entry points, and the long-term structural drivers remain intact. Staggered investments can be considered.
On the other hand, Jain mentions that pharma and healthcare remain strong thematic plays, particularly because they offer defensive qualities in uncertain markets. Given India's demographic trends—rising average age, increasing healthcare awareness, and lifestyle-related health issues—this sector is poised for long-term structural growth.
'Investors who do not currently have any exposure to this space may consider allocating around 10% of their total equity portfolio to healthcare and pharma funds. However, this should be done with a minimum 3–5 year investment horizon and as part of a well-diversified portfolio. A staggered investment approach (via SIP or tranches) can also help manage entry-point risk,' Jain advises investors.
Apart from Baroda BNP Paribas Health and Wellness Fund, there are 16 funds based on the pharma and healthcare sector, of which 10 have a track record of three years in the market.
ICICI Pru Pharma Healthcare & Diagnostics (P.H.D) Fund offered the highest return of around 29.05% in the last three years, followed by
SBI Healthcare Opp Fund
, which has offered a 28.36% return in the same time period. LIC MF Healthcare Fund gave the lowest return of around 20.77% in the said period.
With enough funds based on the sector and having a long performance track record, Shinde mentions that the outlook is neutral to positive overall but very constructive on hospitals and specialty pharma segments. While U.S. pricing pressure remains a concern, domestic demand, growth in chronic therapies, and export diversification are supportive.
In the last three years, these funds have offered an average return of 24.72%, and in the last five years, they have delivered an average return of 21.93%, with up to 25.16% return in the last five years. LIC MF Healthcare Fund gave the lowest return in the last five years at around 17.40%.
Jain believes that the long-term outlook for India's pharma and healthcare sector remains robust. Post-COVID, there has been a fundamental shift in consumer behaviour and government focus toward healthcare infrastructure, wellness, and preventive care. India's role as a global pharmaceutical manufacturing hub and growing domestic demand support the sector's earnings potential.
'While short-term volatility may persist due to regulatory changes or global market sentiment, the structural drivers remain intact. Innovation in biosimilars, rising export demand, growth in diagnostics and hospitals, and increasing insurance penetration further strengthen the investment case. As such, this sector offers a compelling mix of growth and defensiveness, making it a relevant thematic allocation for long-term investors,' she added.
One should always invest based on their risk appetite, investment horizon, and goals.
(
Disclaimer
: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)
If you have any mutual fund queries, message ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on
ETMFqueries@timesinternet.in
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