Home Market Time is right for MF investors to look at consumption theme, say...

Time is right for MF investors to look at consumption theme, say experts


Given the uncertainty over trade wars, high fiscal deficit, rising interest rates in the US and forthcoming general elections in India, wealth managers believe it is time for investors to be defensive and have a higher allocation to companies where earnings visibility is higher. Consumption is one such theme, which they are bullish on and ask investors could allocate a small portion of their portfolio. By 2030, India is expected to be the third largest consumer market in the world. Indias 130 crore population, which enjoys a demographic advantage with proportion of working age population over 50%, also makes consumption a structural story for a long period. The theme offers twin benefits as it is both cyclical and defensive. “This is a long standing theme, given the changing dynamics of the country,” says Kaustubh Belapurkar, director-fund research, Morningstar India. We take a look at five funds, through which investors can take exposure to this theme:

AUM: Rs 397 crore Fund Manager: Ankit Jain
Top 3 holdings: HDFC Bank, ITC, Havells India
Top 10 stocks as % of portfolio: 41%
1-year/3-year return (%): 14.52/14.29

The fund manager follows a bottomup approach to stock picking and buys into companies with a mix of growth and value. The fund managers has built a concentrated portfolio based on high conviction ideas, without any bias to market cap or style. Companies where there is longevity of earnings and which can compound at 20% fit into the portfolio.

AUM: ₹1,190 crore Fund Manager: Ennettee Fernandes and Sonam Udasi
Top 3 holdings: Hindustan Unilever, ITC, Maruti
Top 10 stocks as % of portfolio: 52%
1-year/3-year return: 22.19 /NA

One of the best performers over the last one year, the fund manager eyes companies which are winners in the segment of business they operate in. The fund chooses across companies in automobiles, media and entertainment, consumer durables and FMCG, textiles. Companies with no leverage and clean balance sheets make their way to the portfolio. With midcap valuations expensive, the fund manager has a higher allocation to large caps.

AUM: ₹2,540 crore
Fund Manager: S Krishna Kumar
Top 3 holdings: Mahindra and Mahindra, Hindustan Unilever, ITC
Top 10 stocks as % of portfolio: 30%
1-year/3-year return: 3.35/16.18

The Fund aims to capitalise on the growing rural economy which is undergoing a structural shift which will span over a couple of decades. Consumer facing stocks are chosen from four themes namely Farm to fork (inputs like fertilisers, processing equipment like tractors and final agri crop), consumption, financial inclusion and ancillary space.

AUM: ₹627 crore
Fund Manager: Saurabh Pant
Top 3 holdings: ITC, Colgate Palmolive, Jubilant Foodworks
Top 10 stocks as % of portfolio: 62%
1-year/3-year return: 18.59 /16.53

The fund will follow a bottom-up approach to stock-picking and choose companies engaged in Consumer durables/non durables, retail, Textiles, Auto OEMs, Media & entertainment, Hotels, resorts & travel services, Education services, Airlines, E-commerce and Consumer transportation & logistics services. The fund manager looks to buy consumer facing companies with strong brands at reasonable valuations. Companies in sectors like consumer durables, hotels, retail, FMCG constitute the portfolio.

AUM: ₹67 crore
Fund Manager: Jahnvee Shah and Sa
ilesh Raj Bhan
Top 3 holdings: ITC, Maruti, M&M Top 10 stocks as % of portfolio: 55%
1-year/3-year return: -0.63/5.68

Erstwhile Reliance Media and Entertainment Fund, it came into its new avtar from April 28, 2018. The fund manager looks at buying into companies where categories are underpenetrated, premiumization is possible and consumer services where demand is growing. Companies that find their way into the portfolio are ones that are reasonably valued and have a longevity of business.

Original Article


Please enter your comment!
Please enter your name here