UTI Pharma & Healthcare Fund is the largest of the three Pharma funds with assets of Rs 55 crore. Launched around the peak of the bull run in Indian pharma stocks in June 1999, the fund stands out among peers. Despite the fund's launch in a heated market for pharma stocks, its allocation to non-pharma stocks and an active portfolio churning has been the key performance drivers.
By its charter, the fund can invest up to 10 percent of its assets can be invested in non-pharmaceutical stocks. The fund was largely stuffed with MNC pharma stocks, which has been out of favour against Indian pharma stocks. But with a growing asset base, the fund shifted towards Indian pharma stocks by April 2000, to clock its best 1-month gain of 28 percent in April 2000. Besides, a timely exit from its technology positions also helped the fund. Despite this, the fund slipped 18 percent in 2000. The fund was able to handsomely outperform the BSE Healthcare Index, which fell 34 per cent in 2000.
In the current year, the domestic pharma companies have been in limelight for their better performance and a focus on generic exports business. The fund has larger allocation of 59 percent to leading Indian pharma stocks and the rest in the MNC stocks, the dull performers in recent times. The fund's top five positions include Cipla, Ranbaxy, Dr Reddy's, Hoechst Marion Roussel and Pfizer. Today the fund is fully invested in pharma stocks.
The bright outlook for the sector and the fund's sharp focus on sustained performance makes UTI Pharma & Healthcare attractive for a medium-term participation in pharma stocks.