ICICI Prudential Healthcare ETF NFO opens on May 6

The open-ended exchange traded fund will track Nifty Healthcare TRI

Staff Writer   /   May 3, 2021

ICICI Prudential Mutual Fund has announced the launch of ICICI Prudential Healthcare ETF. The New Fund Offer (NFO) opens on May 6 and closes on May 14. This is the 2nd healthcare ETF offering within a week, after Axis Healthcare ETF NFO. Read on to know more.

NFO special features

ICICI Prudential Healthcare ETF provides exposure to leading companies forming part of the healthcare sector.

It is suitable for investors looking to gain exposure from the overall healthcare segment.

The minimum investment during NFO required is Rs 1,000 and in multiples of Re.1.

ICICI Prudential Healthcare ETF

The offering aims to provide returns that closely correspond to the returns provided by its benchmark Nifty Healthcare TRI index in the same proportions, subject to tracking errors. The ETF will be listed on NSE and BSE.

ICICI Prudential Healthcare ETF provides investors a choice to take exposure to multiple facets of healthcare through this product.

Index basics

The Nifty Healthcare index comprises 20 fast growing Indian Healthcare companies. In terms of index constituents, Sun Pharmaceutical Industries, Dr Reddy’s Laboratories, Divi’s Laboratories, Cipla and Apollo Hospitals Enterprise form the top five names of the index.

This index has outperformed the Nifty 50 index in 6 out of the last 10 calendar years. (Source: www.nseindia.com, Data as of March 2021).

Fund-house speak

Nimesh Shah, MD & CEO, ICICI Prudential AMC said, “ICICI Prudential Healthcare ETF provides exposure to a basket of securities in the healthcare sector. Given the rising health problems, lifestyle choices and outbreak of epidemics, the healthcare sector has a strong potential to grow steadily in the coming decade.”

“Also, the need for better healthcare facilities will always be a constant need considering the large population of India. Therefore, this sector provides a good scope of investment,” Shah added.

Healthcare ETFs

ICICI Prudential Healthcare ETF is the second such product in the market today. Axis Healthcare ETF NFO offers a passive way to play the healthcare sector wealth creation opportunity.

So far, the only way offered to play the pharma/healthcare sector was actively managed funds. The biggest ones among them are Nippon India Pharma, ICICI Pru Pharma Healthcare & Diagnostics, SBI Healthcare Opportunities, Mirae Asset Healthcare and DSP Healthcare. This category of funds have given an average CAGR of 12 per cent in last 5 years and an average CAGR of 16 per cent in 10 years.

Any sectoral play requires entry at the right price, waiting and then exit at the right price. So, such funds must only be a part of satellite allocation in your portfolio.

Why buy

Considering the growth drivers of the healthcare sector, ICICI Prudential Healthcare ETF provides investors with an opportunity to benefit from this growing segment in a cost effective manner through this ETF.

The open-ended exchange traded fund will track NIFTY Healthcare TRI. So, this also means there will be no fund manager led stock selection.  
Since the ICICI Pru Healthcare ETF is a new ETF, keep a watch on its trading frequency on the exchange, its impact cost, tracking error and any deviation between ETF NAV and ETF market price.

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