Consumption is one of the key drivers of the Indian economy. Various AMCs such as Aditya Birla Sun Life, Nippon India, SBI MF, ICICI Prudential, Mirae Asset, Canara Robeco, Tata Mutual Fund, Kotak have schemes on this theme in the market. The 21 consumption funds managed a total AUM of Rs 28,048 crore at the end of the last financial year.
Buying opportunity at Rs 10
Investors have the opportunity of buying units of the Axis Consumption Fund at Rs 10. The window for subscription opened on August 23. It will remain open till September 6.
Minimum investment
One can invest a minimum of Rs 100 and any amount beyond that. To get the full benefit, Axis Mutual Fund authorities advise that one should remain invested for a minimum of 5 years.
Exit loads
There is zero exit load for up to 10% of investments if redeemed or switched out within 12 months. For the remaining investments, 1% load applies within this time window. However, beyond a period of 12 months, there is no exit load at all.
Sectors to target
Consumption funds are equity funds that invest in stocks that benefit from India’s consumption story, mainly from the consumer sector. According to the fund house, these would typically represent the broad sectors of FMCG, automobiles, consumer services, consumer durables, telecommunications, healthcare, power, and realty.
“A consumption fund would be appropriate for anybody who is seeking diversification, courtesy the consumption sector. Mass consumption and class consumption are both happening in India. Premiumisation and digitisation are all gaining ground. In many ways, several important segments of the basic consumption sectors are gaining traction,” remarked Nilanjan Dey, investment strategist and director, Wishlist Capital.
Household consumption growth rate
Household consumption in India rose nearly twice in the past decade at a compounded annual growth rate of 7.2%, which is more than not only the US but also China. Rising income, urbanisation, credit culture are helping boost aggregate consumption.
Consumption fund returns
According to Value Research, the median returns of top 7 consumption funds with a five-year history have beaten the Nifty 500 TRI 87% of the time. These returns are five-year daily rolling returns. These funds have also declined less during market dips.
There are mutual funds on the theme of consumption from several prominent AMCs. The Axis Consumption Fund NFO offers the opportunity to get units for Rs 10. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
