Want to ride India's consumer wave? Axis MF has launched a consumption fund

This fund aims to capture the value created by India's expanding consumer base, their changing preferences, and increasing purchasing power.

Axis Mutual Fund on Thursday launched the Axis Consumption Fund, a New Fund Offer (NFO), to capitalize on rising incomes, rapid urbanisation and a burgeoning middle class. This fund provides investors with a diversified portfolio of stocks poised to benefit from India's rising consumption trends.

Fund details: 

• NFO Period: 23rd August to 6th September 2024 
• Category: Thematic
• Benchmark: NIFTY India Consumption TRI
• Typical Investment Horizon: 5+ years
• Min. application amount: Rs. 100 and in multiples of Rs. 1 thereafter
• Exit Load: If redeemed / switched-out within 12 months from allotment date: For 10% of investments: NIL
• For remaining investments: 1% If redeemed / switched-out after 12 months from allotment date: NIL
• Fund Managers: Mr. Hitesh Das and Mr. Shreyash Devalkar, Ms. Krishnaa Narayan (for Foreign securities) 

Why now? 

The consumption sector is poised to be a major driver of India's economic growth. Supported by favorable demographics, rising disposable incomes, and a young and aspirational population, consumer spending is expected to surge in the coming years. The Axis Consumption Fund aims to tap into this potential by offering a diversified portfolio encompassing various consumer-driven sectors, including FMCG (Fast-Moving Consumer Goods), automobiles, telecommunication, healthcare, and real estate.   

Key Drivers of Consumption Growth:

•  Digitalization has made it easier for consumers in remote areas to buy, pay, and consume goods and services.
• Indians are increasingly aspiring to improve their quality of life, leading to higher consumption.
•  Consumers are upgrading to premium products and services across various categories.
•  The growing urban population is driving demand for consumer goods and services.
• Higher per capita incomes provide consumers with more disposable income to spend.
• Digital Payments: The widespread adoption of digital payment methods like UPI, credit cards, and EMI has made it easier for consumers to make larger purchases.

By investing in this fund, investors can gain exposure to a diversified portfolio of stocks and potentially benefit from the long-term growth prospects of the Indian consumption sector.

Why is Axis Launching this NFO?

Axis recognizes the evolving consumption patterns as a crucial aspect of the country's growth trajectory. "“The evolving consumption patterns in India are a crucial aspect of India’s growth trajectory. As our populatin's aspirations grow and spending power increases, companies in this space are positioned for sustained growth”, said Ashish Gupta, Chief Investment Officer, Axis AMC. 

“The Axis Consumption Fund offers investors an opportunity to participate in this unfolding trend and aims to build a robust portfolio that captures this dynamic growth. This fund not only reflects the current consumption trends but also anticipates future growth drivers, Gupta added.

Who Should Invest?

This fund caters to investors seeking exposure to India's dynamic consumption sector. It's ideal for those with a long-term investment horizon who believe in the continued growth of the Indian consumer market.   

Key Features of the Axis Consumption Fund:

Thematic Approach: The fund focuses specifically on companies that stand to benefit from India's evolving consumption landscape.   

Bottom-Up Stock Selection: The fund managers will employ a bottom-up approach, meticulously selecting stocks based on individual company potential.

Diversification Beyond FMCG: The fund goes beyond traditional FMCG giants, encompassing sectors like consumer discretionary, retail, auto, and realty.

Strategic Investment Areas:

The fund focuses on specific trends within the consumption sector:

• Innovation: The fund recognizes that innovation isn't limited to technology, with new products like sports energy drinks and cold-pressed oils emerging.
• Formalization: Increased market share with the shift towards organised market in sectors such as apparel, tiles, and sanitary ware, textile, footwear, jewellery, etc.
• Urbanization: Changing lifestyles and work patterns in urban areas are driving demand in real estate and consumer discretionary products.
• Online Penetration: The fund recognizes the massive growth potential in online grocery, fashion, and quick commerce.
• Premiumization: Consumers are increasingly opting for premium products and services, creating opportunities in sectors like auto, FMCG, and beauty.