Fund Radar: Do pharma funds offer immunity in a sick market?

Pharma stocks are seen as safe havens. But when the market crashes, does this logic hold? We tested the theory across eight major downturns and found surprising results. Pharma companies are often seen as ‘all-weather’ stocks. The logic is simple—whether a nation is at war, hit by a calamity or facing economic trouble, people don’t stop taking their medicines. Healthcare demand, in theory, stays steady no matter what’s happening outside. But does this shield really hold when markets tumble? Or is it just a comforting myth? We find out. But first, what are pharma funds? Pharma funds invest at least 80 per cent of their assets across the Healthcare sector, which is dominated by pharmaceutical companies. Presently, there are 28 pharma funds in India – 16 active and 12 passive. That said, this is a fairly young category, with 18 funds launched after the Covid pandemic. Of these, only three have a track record of over 20 years, with one other fund having crossed the nine-year mark. Collectively, these funds have an asset base of over Rs 31,000 crore, with the three largest funds accounting for nearly 56 per cent of the AUM (assets under management). On average, pharmaceutical funds allocate 37 per cent to large caps, 35 per cent to mid caps and 28 per cent to small caps, providi