Edelweiss AMC launches Indo-global healthcare index fund; should you invest?

Edelweiss MSCI India Domestic & World Healthcare 45 Index Fund

Edelweiss Mutual Fund is launching a new index fund which will be investing in stocks of Indian and Global Healthcare companies. The Fund is a passive Index Fund investing in stocks comprising the underlying MSCI India Domestic & World Healthcare 45 Index which constitutes 45 healthcare sectors listed across India and US market. The NFO of this fund opens for 15 days on 6th October 2020 and closes on 20th October 2020.

What is an Index Fund?

As the name suggests, an Index Mutual Fund invests in stocks that imitate a stock market index like this fund invest in MSCI index. These are passively managed funds which means that the fund manager invests in the same securities as present in the underlying index in the same proportion. These funds endeavor to offer returns comparable to the index that they track.

What is difference between Index Fund and ETF?

Exchange trade funds, or ETFs, represent baskets of securities traded on an exchange like stocks. These are bought or sold at any time, whereas index funds are like any other open-ended equity mutual funds which are priced at the end of the day.

What are the Advantages of Passive investing over actively managed Funds?

Active investment has always been preferred by many investors due to their capability of giving better returns compared to passive fund but the later has its own merits.

  • Low Cost
  • No Fund Manager Bias
  • Well diversified
  • Higher Transparency

What is tracking error in passive investing?

Since passive funds are expected to generate return in line with the underlying benchmark, deviation in performance should be very low. Tracking error is a measure of the risk in investment portfolio that is due to expense ratio of the fund and some operational inefficiency that may occur while buying and selling stocks and replicating the index. It indicates how closely a fund follows performance of underlying index.

What if product composition of the Fund?

The India and World constituents are combined in the following manner

70% weightage of MSCI India Healthcare component and 30% weightage of MSCI world Healthcare component.

The domestic component includes Top 25 stocks based on FF Market cap of sectors covering Pharma, Hospitals, Diagnostics, Life science tools & Services and Biotechnology

Global component includes 20 companies listed in US which has Top 5 stocks from 4 sub-sectors each – Pharma sector, Healthcare Equipment, Biotechnology and Life Sciences Tools and services based on their Full Market Cap

What is the market cap allocation of the Fund?

The fund invests top healthcare companies of both USA and India. The Global composition has more than 85% in large cap and rest in Midcaps and Indian allocation has more than 75% in large caps and rest in Midcaps.

Why is benefit of investing in such composition?

Invest in both US and India give opportunity to invest in companies with innovation and growth.

US is the largest healthcare market with some of world’s top healthcare companies. These companies are leaders in innovation and patents.

On the other hand, India is one of the fastest growing healthcare markets in the world. It is one of the market leaders in exports. Moreover, rising Government spending and increase in penetration will boost this sector.

Mutual fund investments are subject to markets risks, read all scheme related documents carefully

Disclaimer: This document has been prepared by Edelweiss Asset Management Limited (Edelweiss AMC) based on internal data, publicly available information and other sources believed to be reliable. Any calculations made are approximations, meant as guidelines only, which you must confirm before relying on them. The information contained in this document is for general purposes only. The document is given in summary form and does not purport to be complete. The document does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Sector(s) / Stock(s) / Issuer(s) mentioned above are for the purpose of explanation and should not be construed as recommendation. The fund manager(s) may or may not choose to hold the stock mentioned, from time to time. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). The information/ data herein alone are not sufficient and should not be used for the development or implementation of an investment strategy. The same should not be construed as investment advice to any party. The statements contained herein are based on our current views and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Neither Edelweiss Asset Management Limited (Edelweiss AMC) and Edelweiss Mutual Fund (the Fund) nor any person connected with them, accepts any liability arising from the use of this document. Edelweiss Mutual Fund/AMC is not guaranteeing returns on investments made in this scheme. The recipient(s) before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis of information contained herein. Past performance may not be sustained in the future.

Source: MSCI. The MSCI data is comprised of a custom index calculated by MSCI for, and as requested by, Edelweiss Asset Management. The MSCI data is for internal use only and may not be redistributed or used in connection with creating or offering any securities, financial products or indices. Neither MSCI nor any other third party involved in or related to compiling, computing or creating the MSCI data (the “MSCI parties”) makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and the MSCI Parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to such data. Without limiting any of the foregoing, in no event shall any of the MSCI Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

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