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Motilal Oswal Asset Management Company (MOAMC) has announced the launch of its Motilal Oswal S&P BSE Healthcare ETF (An open ended scheme replicating / tracking the S&P BSE Healthcare Total Return Index).

The NFO opens on 14 July 2022 and closes on 22 July 2022.

The S&P BSE Healthcare Total Return Index is designed to provide investors exposure to companies included in the S&P BSE All Cap that are classified as members of the healthcare sector. It is reconstituted annually in September. At present, the index is composed of 97 constituents spanning Pharmaceuticals, Hospitals, Diagnostic, Medical Equipment etc. This covers more than 99% of the listed Healthcare universe in terms of market capitalization.

As of June 2022, the index constituents feature Sun Pharmaceuticals Industries Ltd, Dr. Reddy’s Laboratories Ltd, Cipla Ltd., Divis laboratories Ltd. and Apollo Hospitals Enterprise Ltd. The top 10 stocks account for close to 62% of weight in the index. In terms of industry breakup – Pharmaceutical is the largest with its weight close to 81% followed by Hospitals 14% and Healthcare Services 3% forming into the top 3. The index offers healthy exposure to mid and small-size Healthcare companies with the majority weight going to large-cap companies.

Healthcare sector: A defensive play

The healthcare sector has gained centre stage after the pandemic and is primed to undergo structural changes. Rising income and rising middle class, coupled with increased awareness about healthcare, augurs well for the sector. Unlike cyclical sectors, demand for healthcare is resilient and less impacted by economic swings.

The S&P BSE Healthcare Total Return Index has noted lower drawdowns over the last 15 years compared to the broader markets. Historically, the index tends to outperform the broader benchmarks during Bear and Recovery market cycles.

Navin Agarwal, MD & CEO, Motilal Oswal Asset Management Company Ltd said, “At Motilal Oswal AMC, we target to provide options of passive funds across key segments. The healthcare industry has grown 14x in the past 14 years and may continue growing rapidly on the back of increased insurance adoption, medical tourism, and rising incomes. The pandemic has reinforced the importance of healthcare facilities in India. Government’s plan to ramp up spending and provide healthcare facilities to the economically weaker section will also boost the domestic healthcare sector.”

The S&P BSE Healthcare Total Return Index noted CAGR of 13.1% vs S&P BSE AllCap Index 10.6%, outperforming the broad market by more than 2%. Similarly, on calendar year basis the index noted outperformance for 8 out of the last 14 calendar years vs S&P BSE AllCap Index. 

Pratik Oswal, Head of Passive Funds, Motilal Oswal Asset Management Company Ltd said, “Historically healthcare as a sector is considered as defensive play, and it has experienced lower drawdowns. Also, unlike cyclical sectors, demand for healthcare is resilient and less impacted by economic swings.” He further added that “By covering 99% of the healthcare universe, the Motilal Oswal S&P BSE Healthcare ETF offers the broadest exposure among its peer at lower expense ratio.”

During NFO investors can invest minimum Rs. 500/- and in multiples of Re. 1/- thereafter. On ongoing basis investor can purchase/redeem units of the scheme through financial advisor

After NFO, investors can buy/sell units of the units of the scheme in round lot of 1 unit and in multiples thereafter on the exchange or they can approach Motilal Oswal Mutual fund for subscription/redemption in excess of INR 25 crores.

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