DSP Mutual Fund announced the launch of two new index funds, DSP Nifty IT Index Fund and DSP Nifty Healthcare Index Fund. These funds aim to provide investors with a strategic way to participate in sectors known for their resilience compared to broader equity markets.
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.1
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 Nifty IT Index come from various global markets other than India.2 Similarly, ~ 52% of total revenues of companies in the Nifty Healthcare Index comes from global markets. In contrast to these numbers, for companies in the Nifty 50 Index we see only ~ 25% of revenues coming from global markets.3
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 capitalization. The Indian IT sector has demonstrated smooth earnings growth with relatively low earnings variability, which 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 years4, historical cycles suggest potential for a turnaround, making this an opportune moment for investors to consider sector-focused exposure.
The DSP Nifty Healthcare Index Fund seeks to replicate/track the Nifty Healthcare Index and would be investing in the top 20 Healthcare companies by free float market capitalization. India’s healthcare market capitalization as % of total market capitalization is one of the lowest compared to developed and emerging markets. This may present significant growth potential as India’s healthcare infrastructure, insurance penetration, and medical innovation continue to expand.
The New Fund Offer (NFO) period for both funds will be open from June 2 to June 16, 2025.
“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 optimize 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.