Consumption Funds: Make It Everything You Need for a Portfolio

Insights into Consumption Funds

In the fast-moving world, do you feel financially secure and independent? Or do you constantly worry about saving money for your future but have no idea where to start? In that case, Consumption Funds are the best option for you. These funds fall into a thematic category and invest in companies that manufacture consumer-related goods such as automobiles, beauty products, etc.

Well, you might wonder about the scope of investing in these stocks? Let’s see with the help of this article about the future outlooks of consumption theme.

In this post, you will find answers regarding this scheme, which will help you, decide whether it’s worth including in your portfolio.

What are Consumption Funds?

These funds can be defined as financial investments directed towards companies involved in the production of consumer goods that are widely used in our daily lives. These goods may include fast-moving consumer goods (FMCG), cosmetics, automobiles, retail products, and other essential items.

Well now that you have a full grasp of these funds, it is time to learn the merits of investing in them.

Key Benefits of Investing in Consumption Funds

The following are the various advantages offered by the thematic consumption mutual funds:

1. Investing in Daily Needs:It allows you to invest in the products that you consume on a routine basis. This provides a broad scale to find companies related to this theme.
2. Chance to Participate Globally:As consumption is amongst the top contributors of India, it gives you the chance to make profits from the developing economy.
3. Scope for Diversification:Even though these are sector-specific, there are a lot of investment opportunities within the sector. It gives a balanced exposure to various consumer-related businesses.
4. Investments into Trending Stocks:This category has highly trending stocks that are hand-picked by professionals. It takes your money and invests it into companies that are the driving forces of the economy.
5. Generates High Returns:These stocks stand out from the traditional funds and are focused on specific companies of consumer-related goods which have high chances to make good returns.
6. Contributing to Economic Wealth:As the consumer market grows, these funds put your money right next to the economy’s growth. This gives a chance to make good returns by using the progressive development of the country.  

Now that you know the benefits offered by these consumption funds, let us learn ways of investing.

How to Invest in Consumption Funds?

You can invest in its stocks in multiple ways. Here are some simple steps to start your investments:

Step 1: Use an easy-to-use platform for your investments that has a user-friendly interface.

Step 2: Create your online account and fill in your basic details.

Step 3: Complete your mandate ID using Digi locker and verify your KYC (know your customer) details.

Step 4: Make sure that you have your PAN and Aadhaar linked.

Step 5: Choose the best consumption scheme and add it to your cart.

Step 6: Complete your payment with UPI or net banking.

Step 7: Monitor and rebalance your investments as per the market.

Next, you must find yourself asking if are these funds the best choice for you? Let’s understand that in detail.

Are Consumption Funds the Right Choice for You?

Consumption Funds can be a suitable choice for you if:

1. You Believe in Consumer Growth:If you are optimistic about the growth of consumer spending in the economy, especially in markets like India, consumption schemes can help you capitalize on this trend.
2. Long-Term Investment Horizon: These funds are designed for long-term growth, so if you can commit to investing for at least 5 years, you may benefit from the potential appreciation in value.
3. Risk Tolerance:Consumption stocks invest in equities, which can be volatile. If you are comfortable with market fluctuations and can handle short-term risks for potential long-term gains, these funds might be a good fit.
4. Diversification Needs:If you want to diversify your portfolio with exposure to various sectors tied to consumer behavior—like FMCG, healthcare, and consumer durables these funds provide a broad-based investment option.
5. Interest in Thematic Investing:If you prefer thematic investments that focus on specific trends rather than traditional sectoral funds, consumption funds align well with this approach.

Before investing, consider consulting a financial advisor to ensure that these funds align with your overall financial goals and risk profile.

5 Best Consumption Funds for SIP in 2024

The top 5 consumption mutual funds schemes to invest via SIP are as follows:

1. SBI Consumption Opportunities Fund: It was launched on the 14th of July, 1999 and has a standing AUM of Rs.2679 Crores in today’s date.
2. Nippon India Consumption Fund:This scheme was introduced on the 30th of September 2004. It has a strong Asset Under Management at Rs.1410 Crores.
3. Mirae Asset Consumption Fund:With an AUM of Rs.4050 Crores, this stock has been in existence since, 2011.
4. Tata India Consumer Fund: Being introduced in the market on the 5th December 2015, it is currently managing an AUM of Rs.2247 Crores.
5. Canara Robeco Consumer Trends Fund:After being launched on 14th September 2009, it has managed an AUM of Rs.1694 Crores as of 31.07.24.

Final Note

To sum up, these consumption schemes, which are based on a thematic category, have the potential to make good returns in the future. Although these stocks have medium risk, investing via SIP is the smart choice. It helps you plan according to your financial status. Plus, you can adjust your investments as per your needs.