Consumption funds: Rising volumes, margins may lift thematic offerings

But geopolitical risks could weigh on overall equity markets, including consumption segment

With a reduction in goods and services tax (GST) slabs from four to two, and many goods being shifted to lower brackets, consumption is expected to get a boost. Consumption funds, which invest in fast-moving consumer goods (FMCG), consumer durables, auto, retail, and hotels, have delivered flat returns (-1.4 per cent) over the past year. The rate cuts, along with other factors, are expected to bring about a turnaround in the performance of these funds.

 

Impact of rate cuts

 

Discretionary categories like auto, consumer durables, footwear, and apparel stand to gain. “These are segments where consumers typically defer purchases in