Is the Exposure to IT & Pharma Funds a Good Decision?
The crawling performance of the IT and pharmaceutical sectors in the recent past has dragged many investors in doubts. The returns from the investment in both the categories have revealed a horrible scenario to the investors. But, ups and downs are the two aspects of the investment world, which one or the other day every industry faces. What if the current scenario of these sector funds is poor.
The expert analysts and researchers have confronted their valuable comments for the investment benefits in these sector-oriented funds. Let’s take down the analysis of each industry separately to know the conditions better.
Pharmaceutical Sector:
In the ongoing phase of life, it can be analysed that the demand for medicines and healthcare products are never going to lessen down. But, in the actual case, every business moves around its life cycle which witnesses many ups and downs along with the fluctuations in the factors affecting demand in the economy. If we see the recent performance of the investment market, it shows nearly all sectoral indices in green except pharmaceutical. Many investors will pull back their investments from this zone with the fear of losing money, but the well-informed investor will understand the profitability and growth which lies in the long run. Let’s have a glimpse on the performance of Indian pharmaceutical industry.
India is the largest generic drugs provider globally and has the third largest pharmaceutical market in terms of volume. It is expected to expand to USD 55 billion at a CAGR of 15.92% by the year 2020 and at USD 100 billion by 2025. The long-term growth of this sector seems fabulously great, but the requirement says that the investor should possess some knowledge to play safely in the market swings. For the short-term investors, it is quite a ‘not so comfortable’ zone in the current situation as the returns would be comparatively less. Furthermore, this is very true that investing in a sector fund is always fraught with risk. But, the pharma industry is said to be the most defensive one among all other categories. The investment objective can be attained safely if the funds are thoroughly tracked.
Information Technology Sector:
India is the top offshoring destination for IT companies across the world. The IT industry has proven its success many times, but in the recent past, its market scenario was not so favorable. The growth of this industry is estimated to go down to 6.3%. If the prophecy proves correct, this will be the second successive year of spiky fall in the growth rates of this industry. In the year 2015, the top-five companies under this zone grew by 12.3%, which, in the consecutive year fell to 8.7%. The investors who have a weak heart for the market-risk will definitely don’t step in this zone. But the one who fights the risk always win, and that’s what in next lines we are going to reveal. Although the IT category has not performed well in the preceding past, it can open up the box of high growth in the near future.
India is the world’s largest sourcing destination for IT industry which is accounting approximately 67% of the USD 124-130 billion markets. The expert analysis also states that the sector is also expected to triple its current annual revenue to reach USD 350 billion by the year 2025. Thus, a long-term mutual funds investment in india can be a good option in this sector. But, if you do not have the heart for volatility, and patience for long-term investment then you have to lose the opportunity of attaining towering growth through the extended investment in this industry.
However, both pharmaceutical and IT sectors are currently showing beggarly performance. No one knows what’s behind the next gate; it can be exceptionally high growth which various analyst are talking about, or may be a wreck. There are no doubts that these sector funds are a good choice for long-term investors. The short-term investors can also enjoy the benefits by reducing the risk of timing the market and volatility, which is possible if you invest through Systematic Investment Plans (SIPs). You can also avail our best services for online investing at MySIPonline which is an online mutual fund investment platform.
