DSP Mutual Fund has launched two new index funds — the DSP Nifty IT Index Fund and the DSP Nifty Healthcare Index Fund. These offerings provide investors a strategic avenue to gain exposure to the IT and healthcare sectors, both known for their relative resilience in volatile equity markets.
The new fund offer, or NFO, for both funds, is open for subscription and will close on June 16.
The DSP Nifty IT Index Fund aims to replicate/track the Nifty IT Index and would be investing in the top 10 IT companies by free float market capitalisation. The Indian IT sector has demonstrated smooth earnings growth with relatively low earnings variability, which has helped to reduce earnings surprises. Over the last 12 years, the Nifty IT index has delivered consistent earnings growth, outperforming many other sectors. While the IT sector has underperformed the broader market in recent years, historical cycles suggest potential for a turnaround, making this an opportune moment for investors to consider sector-focused exposure.
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The DSP Nifty Healthcare Index Fund aims to replicate or track the Nifty Healthcare Index, investing in the top 20 healthcare companies based on free-float market capitalisation. Notably, India’s healthcare sector accounts for a relatively small share of the country’s total market capitalisation compared to developed and emerging markets. This indicates significant growth potential, supported by expanding healthcare infrastructure, rising insurance penetration, and ongoing medical innovation.
"The launch of the DSP Nifty IT Index Fund and DSP Nifty Healthcare Index Fund offers investors a balanced approach to participate in sectors that combine growth with resilience. In uncertain market environments, defensive sectors like IT and healthcare have seen lower drawdowns, with the potential to deliver attractive returns,” said Anil Ghelani, CFA, Head of Passive Investments & Products at DSP Mutual Fund.
“By strategically including low-beta sectors such as Information Technology and Healthcare, investors can construct a more resilient and efficient portfolio, which may help them optimise returns and effectively manage market risk. Defensive sectors are currently underrepresented in broader indices, and history shows that when underweight, sectors like IT and Healthcare tend to outperform the market over the following year. Our disciplined passive management approach aims to closely track these sectors, helping investors capture structural growth with lower volatility,” said Gurjeet Kalra, Business Head – Passive Funds, DSP Mutual Fund.
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Defensive sectors such as Information Technology (IT) and Healthcare have historically exhibited low beta relative to the broader equity market, meaning they are less affected by market downturns, economic crises, or geopolitical events. For instance, during the Global Financial Crisis (Jan – Oct 2008) and the Covid-19 pandemic (Jan – March 2020), Nifty Healthcare and Nifty IT indices outperformed the broader Nifty 500 Index by experiencing lower drawdowns and quicker recoveries.
These sectors benefit from diversified global revenues, which reduce their dependence on domestic economic cycles. To put this in context of numbers, ~ 96% of total revenues for the companies in the Nifty IT Index come from various global markets other than India.
Notably, 52% of the total revenues for companies in the Nifty Healthcare Index are derived from global markets, compared to just 25% for companies in the Nifty 50 Index.
The new fund offer, or NFO, for both funds, is open for subscription and will close on June 16.
The DSP Nifty IT Index Fund aims to replicate/track the Nifty IT Index and would be investing in the top 10 IT companies by free float market capitalisation. The Indian IT sector has demonstrated smooth earnings growth with relatively low earnings variability, which has helped to reduce earnings surprises. Over the last 12 years, the Nifty IT index has delivered consistent earnings growth, outperforming many other sectors. While the IT sector has underperformed the broader market in recent years, historical cycles suggest potential for a turnaround, making this an opportune moment for investors to consider sector-focused exposure.
Also Read | NFO Insight: Nippon Income Plus Arbitrage Active FoF opens. Is it time to add this emerging category to your portfolio?
The DSP Nifty Healthcare Index Fund aims to replicate or track the Nifty Healthcare Index, investing in the top 20 healthcare companies based on free-float market capitalisation. Notably, India’s healthcare sector accounts for a relatively small share of the country’s total market capitalisation compared to developed and emerging markets. This indicates significant growth potential, supported by expanding healthcare infrastructure, rising insurance penetration, and ongoing medical innovation.
"The launch of the DSP Nifty IT Index Fund and DSP Nifty Healthcare Index Fund offers investors a balanced approach to participate in sectors that combine growth with resilience. In uncertain market environments, defensive sectors like IT and healthcare have seen lower drawdowns, with the potential to deliver attractive returns,” said Anil Ghelani, CFA, Head of Passive Investments & Products at DSP Mutual Fund.
“By strategically including low-beta sectors such as Information Technology and Healthcare, investors can construct a more resilient and efficient portfolio, which may help them optimise returns and effectively manage market risk. Defensive sectors are currently underrepresented in broader indices, and history shows that when underweight, sectors like IT and Healthcare tend to outperform the market over the following year. Our disciplined passive management approach aims to closely track these sectors, helping investors capture structural growth with lower volatility,” said Gurjeet Kalra, Business Head – Passive Funds, DSP Mutual Fund.
Also Read | Gold prices may fall 12-15% in next 2 months, warns Quant Mutual Fund
Defensive sectors such as Information Technology (IT) and Healthcare have historically exhibited low beta relative to the broader equity market, meaning they are less affected by market downturns, economic crises, or geopolitical events. For instance, during the Global Financial Crisis (Jan – Oct 2008) and the Covid-19 pandemic (Jan – March 2020), Nifty Healthcare and Nifty IT indices outperformed the broader Nifty 500 Index by experiencing lower drawdowns and quicker recoveries.
These sectors benefit from diversified global revenues, which reduce their dependence on domestic economic cycles. To put this in context of numbers, ~ 96% of total revenues for the companies in the Nifty IT Index come from various global markets other than India.
Notably, 52% of the total revenues for companies in the Nifty Healthcare Index are derived from global markets, compared to just 25% for companies in the Nifty 50 Index.
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