Should you be investing in consumption themed MFs Now

The current talk of the town in the investment fraternity is consumption theme. Most of the analysts and fund managers are bullish on the consumption theme. This is further indicated by the recent quarterly results. Most of the consumption theme-based companies have performed well and have delivered good results. Many of us associate consumption purely with the fast-moving consumer goods (FMCG) sector. Nevertheless, consumption theme is much broader in space and includes a wide variety of sectors. Some of them are non-banking financial companies lending for consumption, automobiles, consumer durables, textiles, paints, media and entertainment, leisure, pharmaceuticals, power, telecom and other utilities.

Nifty consumption represents one of the indices that track the performance of consumption themed based companies. In the last one year it has appreciated by 18.3 per cent and in last three month it has gone up by 4.3 per cent. There are only two other themes that have outperformed this category, they are Nifty MNC and Nifty IT index. Baring one of the consumption fund, all the consumption funds have generated returns in double digit in the last one year. The best fund has given a return of more than 30 per cent in the last one year.

Going ahead, most of the fund managers and analysts have a positive view on consumption story in India. For example, the consumer durable products such as refrigerators, TVs and other electronic products are expected to grow in double digits for the next few years, especially looking at the lower penetration of these products in the Indian household. Moreover, if we look at the current trend, rural consumption has also started to show signs of revival. Next year being the general election year, we might see the government coming out with policies that will help the rural demand to rise along with urban demand. Hence, we believe that consumption is still going to outperform from hereon. Therefore, you can increase your exposure to this sector. We expect these funds to give a return in the range of 9-22 per cent in the next one year.