Kotak Healthcare Fund has emerged as the top performer among pharma and healthcare funds, delivering 28.85% returns over the past year, according to latest data from Value Research. HDFC Pharma and Healthcare Fund closely follows with 28.60% returns, demonstrating the strong performance potential in this sector. The top performers have comfortably outperformed the category's average one-year return of 19.24%, highlighting the significant variation in returns across different fund strategies and portfolio approaches.
Pharma and healthcare funds have delivered impressive returns with 16.6% growth over the past year and 9.5% gains over the past three months, according to reports from Business Standard. Fund managers remain optimistic about the sector's prospects, with Kotak Mahindra AMC's Shibani Kurian noting that healthcare represents a structural growth opportunity driven by improving access, greater affordability, and rising demand for quality healthcare services. The sectoral mutual funds category has delivered 19.94% returns over six months and 19.24% over one year, as reported by Value Research.
While some actively managed funds have gained more than 25% returns, several others have posted much lower returns, highlighting the wide gap between the best and worst performers in the category. The performance picture becomes more pronounced when looking specifically at actively managed pharma and healthcare funds, as category-level numbers include different types of funds including active funds, index funds and ETFs. ICICI Prudential Healthcare Fund delivered 9.02% in the last 1 year, making it the weakest performer among the funds listed, while PGIM India Healthcare Fund returned 27.47% and Bajaj Finserv Healthcare Fund achieved 25.71%.
Investors should carefully evaluate fund composition before investing, as reported by Growthvine Capital's Shubham Gupta, who warns that funds with identical category labels can have significantly different portfolio compositions, risk profiles, and return drivers. Pharma-focused funds offer concentrated exposure to US generic pricing cycles and patent pipelines, but carry higher sensitivity to USFDA regulatory changes and pricing pressures. Healthcare funds provide broader diversification across generic and specialty pharma, APIs, CDMOs, hospitals, diagnostics, and healthcare services, offering greater stability and reduced sector concentration risk. The wide difference in returns shows that investors in the same sector can experience very different outcomes depending on the fund's portfolio and stock selection.
According to HDFC AMC's Nikhil Mathur, pharma and healthcare funds are best suited for aggressive investors comfortable with higher sectoral risk, who can withstand market-driven corrections. FinPro Wealth's Harsh Vira recommends limiting these funds to 5-10% of the overall portfolio depending on risk appetite and conviction. The investment horizon should extend to at least 5-7 years to allow underlying pharma up-cycles to play out and absorb interim volatility, as reported by Business Standard. Even the laggards have remained positive over the one-year period, demonstrating the sector's resilience despite varying performance outcomes across different fund strategies.
