Mirae Asset Healthcare Fund: A Smart Investment Move?

The Mirae Asset Healthcare Fund is a mutual fund scheme that has been in existence for over six years, investing primarily in the healthcare and allied sectors. The fund has a varied portfolio, with investments in hospitals, diagnostics, specialty chemicals, medical equipment, insurance, and pharmaceuticals. It has a minimum SIP investment of Rs. 99 and a minimum additional application amount of Rs. 500. The fund has generated average annual returns of 26.29% since its inception and has an expense ratio of 0.48%. The NAV of the fund as of September 30, 2024, was 43.06. The fund has an investment horizon of 5+ years and is suitable for investors with advanced knowledge of macro trends and a high-risk appetite.

Mirae Asset Healthcare Fund's performance

The Mirae Asset Healthcare Fund is a sectoral/thematic fund that has been in existence for over 6 years. It is an open-ended equity scheme that invests primarily in the healthcare and allied sectors, with a focus on pharmaceuticals and healthcare services. The fund aims to maintain a concentrated portfolio of 30-40 stocks, and it has the flexibility to invest across market capitalizations and styles.

In terms of performance, the fund has delivered average annual returns of 26.29% since its inception. As of September 30, 2024, the fund's NAV was 43.06, with 1-year returns of 51.63%. The fund has doubled the money invested every 2 years and has generated the highest return among sectoral-pharma funds in the last 5 years. It has the second-lowest expense ratio among actively/passively managed sectoral-pharma funds. However, it ranks lower in terms of protecting against volatility within its category.

The fund has a very high-risk level according to SEBI's Riskometer. It has no lock-in period, and investors should be aware that capital gains taxation applies, with different rates for short-term and long-term holdings.

Mirae Asset Healthcare Fund's risk

The Mirae Asset Healthcare Fund is an open-ended equity scheme that invests in healthcare and allied sectors. The fund has a very high risk according to SEBI's Riskometer. It is suitable for investors who have advanced knowledge of macro trends and are willing to take on the possibility of moderate to high losses. The fund has a concentrated portfolio of 30-40 stocks, with investments in pharmaceuticals, healthcare services, hospitals, diagnostics, specialty chemicals, medical equipment, insurance, and other allied subsectors. The fund has flexibility in its investment strategy, allowing it to invest across market capitalizations and styles.

One of the main risks associated with the Mirae Asset Healthcare Fund is its narrow investment focus. It is mandated to invest at least 80% of its assets in the shares of pharmaceutical and healthcare companies. This narrow investment mandate limits the fund's ability to diversify and can increase the potential for losses if the healthcare sector underperforms. Investors are advised to avoid funds with such a narrowly defined investment strategy and instead opt for flexi-cap funds that offer more flexibility to the fund management team.

Another risk to consider is the volatility of the fund's returns. The fund has delivered 23.85% returns since its inception, but past performance does not guarantee future results. The fund's returns can be volatile, and investors should be prepared for the possibility of moderate to high losses, even when the overall market is performing well. The fund's standard deviation and beta values can provide some indication of its volatility and how its performance compares to similar funds in the market.

Additionally, the Mirae Asset Healthcare Fund has an expense ratio of 1.95% to 1.97%, which is higher than the category average of 2.1%. A higher expense ratio means higher fees deducted from the fund's returns, potentially impacting the overall investment returns.

Finally, there are tax implications to consider. If the mutual fund units are sold within one year of the investment date, the entire amount of gain is taxed at a rate of 20%. If sold after one year, gains up to Rs 1.25 lakh in a financial year are exempt from tax, while gains over this amount are taxed at 12.5%. Dividends are also taxed according to the investor's tax slab, and if the dividend income exceeds Rs. 5,000 in a financial year, the fund house deducts a TDS of 10% before distribution.

Mirae Asset Healthcare Fund's expense ratio

The Mirae Asset Healthcare Fund is a mutual fund with a very high-risk rating. It is an open-ended equity scheme that invests in healthcare and allied sectors, including hospitals, diagnostics, specialty chemicals, medical equipment, and insurance. The fund has a mandate to invest at least 80% of its assets in the shares of pharmaceutical and healthcare companies.

The expense ratio of the Mirae Asset Healthcare Fund - Regular Plan is 1.95 as of October 1, 2024. The expense ratio is the annual fee that the fund charges for managing your money. This fee is deducted from the Net Asset Value (NAV) on a daily basis. For example, if you invest 10,000 and the expense ratio is 2%, you will pay 200 rupees in fees.

The NAV of the Mirae Asset Healthcare Fund - Regular Plan was 37.0920 as of August 18, 2024. The NAV, or Net Asset Value, is the per-unit latest value of all the stocks and bonds held in the portfolio.

The fund has delivered 23.85% returns since its inception six years ago. It is recommended that investors only invest in this fund through the SIP route and that they do not invest if they need to redeem their investment in less than seven years.

Mirae Asset Healthcare Fund's tax implications

Mirae Asset Healthcare Funds Tax Implications

When considering investing in the Mirae Asset Healthcare Fund, it is important to understand the associated tax implications. The tax treatment of your investment will depend on the holding period and the amount of gains realised. Here is a detailed overview of the tax implications:

Long-Term Capital Gains Tax

If you sell your mutual fund units after holding them for more than one year from the date of investment, long-term capital gains tax will apply. The current tax rate is 10% if your total long-term capital gains exceed 1 lakh in a financial year. Any cess or surcharge is not included in this rate. This means that if your gains are up to 1 lakh, you will not have to pay any tax on your investment profits.

Short-Term Capital Gains Tax

On the other hand, if you sell your mutual fund units before completing a one-year holding period, short-term capital gains tax will apply. The current tax rate for short-term capital gains is 15%. Similarly, any cess or surcharge is not included in this 15% rate.

Taxation on Dividends

Dividends received from the Mirae Asset Healthcare Fund are added to your income and taxed according to your applicable income tax slab. Additionally, if your dividend income for a financial year exceeds 5,000, the fund house will deduct a Tax Deducted at Source (TDS) of 10% before distributing the dividend to you.

No Tax on Holding Units

It is important to note that as long as you continue to hold your mutual fund units without selling them, you do not have to pay any taxes. Taxes are only levied when you sell your units and realise capital gains, or when you receive dividends.

When making investment decisions, it is always advisable to consult with a financial advisor or tax professional to ensure you fully understand the tax implications specific to your circumstances.

Mirae Asset Healthcare Fund's investment strategy

Mirae Asset Healthcare Fund is an open-ended equity scheme that invests in healthcare and allied sectors. The fund has a concentrated portfolio of 30-40 stocks, with at least 80% of investments in the pharma, healthcare, and allied sectors. The fund has the flexibility to invest across market capitalizations and styles within its theme.

The fund's investment strategy is to generate long-term capital appreciation by investing in equity and equity-related securities of companies that benefit directly or indirectly from the healthcare and allied sectors in India. The fund has a very high risk associated with it, and investors should be ready for the possibility of moderate to high losses even when the overall market is performing well.

The fund has a minimum SIP investment of Rs. 99 and a minimum additional application amount of Rs. 500. The recommended investment horizon is 5+ years. The expense ratio of the fund is 1.93%-1.97%, and the NAV as of 30th September 2024 was 39.067. The fund has a majority of its investments in domestic equities, with a split between large cap, mid cap, and small cap stocks.

The top holdings of the fund include Sun Pharmaceutical Industries Ltd., Aurobindo Pharma Ltd., Dr. Reddy's Laboratories Ltd., Apollo Hospitals Enterprises Ltd., and Glenmark Pharmaceuticals Ltd.

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