Nippon Life India Asset Management Ltd (NAM India) on Monday launched new fund offer (NFO) for Nifty Pharma exchange-traded fund (ETF), which will invest in top 10 pharma companies listed on NSE. The NFO will close for subscription on 28 June.
After years of underperformance, Indian healthcare sector sprang into action post March 2020 as the first wave of covid-19 hit the country. However, from December onwards, the sector went into a healthy correction as investors moved to cyclicals as the economy opened up.
According to experts, the fresh spike in cases has again made the case for allocation to the healthcare sector.
Nifty Pharma total return index (TRI) is the benchmark to the scheme and will be managed by Mehul Dama.
Nippon India Nifty Pharma ETF will be listed on NSE and will be investing in stocks of Nifty Pharma Index in the same proportion as the underlying index. The objective of the scheme is to provide investment returns closely corresponding to the total returns of the securities as represented by the Nifty Pharma Index before expenses.
According to the fund house, buying a single unit offers diversification of 10 stocks in the pharmaceuticals sector and elimination of non-systematic risks such as stock picking and portfolio manager selection by investing in the IT stock basket via Nippon India Nifty Pharma ETF.
The scheme will invest 95-100% of the funds in securities constituting Nifty Pharma Index and 0-5% in money market iInstruments, including tri-party repo on government securities or T-bills, cash & cash equivalents or liquid schemes.
The minimum investment amount is ₹1,000, and in multiples of Re 1, thereafter, and there will be nil exit load for the scheme.
On the taxation front, since healthcare funds are equity funds, short-term capital gains (STCG) on redeeming units within one year are taxed at a flat rate of 15%, irrespective of your income tax bracket, while long-term capital gains (LTCG) are taxed at the rate of 10%, and there is no benefit of indexation.
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