Is Axis Consumption Fund the Right Choice for Your Portfolio?

Insights into Axis Consumption Fund

In the vast landscape of Mutual Funds, n number of schemes can create confusion among investors. This raises the need to be aware of the stocks that are trending in the market.

Let us explore one such great opportunity, the Axis Consumption Fund, which is a newly launched scheme by the Axis Mutual Fund AMC.

To understand better it is important to know that this fund belongs to a thematic category. It means that it invests in consumer-related goods and services such as retail, e-commerce, consumer durables and FMCG (fast-moving consumer goods).

In this article, we will see whether it is worth investing in this stock or not. By exploring the pros and cons of this scheme, it will help investors to make well-thought investment decisions. Let us begin with our detailed analysis of this thematic fund.

Origin of Consumption Theme

It starts with an interesting story which is very important to understand this analysis.

A few years ago a very good example was given to promote investing that

Well, practically it is not possible to do so. Some needs are necessary and fulfilling them is also important. But only if the needs are fulfilled in a balanced manner and proper savings are also invested, we can still create a good amount of wealth.

Where to invest although the process is perfectly explained in the example. That is, if we consume things, the growth of a business will naturally be high. That is why we have got so many opportunities to invest in them.

The most important thing is that earlier there were limited options because India’s consumption was also less. But now our consumption is bad, hence the options of such companies for investment are also very few.

If you shop for clothes from zudio, did you know that the name of your store is Trent? Who has just given multi-bagger returns? Those who order food online from Zomato are also listed for investment. There are many ideas available for stock investing.

And based on these ideas, Axis has launched its new fund, Axis Consumption Fund.

So today we will analyze the investment strategy of this fund so that we can know how it will invest in the consumption theme. Well in the video our purpose is to promote NFO. We will do a proper analysis of the fund as transparently as possible. You have to decide on investing yourself according to your requirements or portfolio.

But in the end, we will definitely give our opinion. And they will also tell who should invest in this fund and in what amount they should invest in this fund.

Key Benefits of Axis Consumption Fund

Here are some benefits that we discovered about this fund which are as follows:

Theme Based Approach

• This stock is made on the idea, which is connected with the goods that we consume in our daily lives.
• It allows them to take advantage of this sector’s growth.
• Being connected to a particular theme gives a chance to grow into a broader range.
• This will provide support to the fund to outperform its category average more easily.
• It also gives exposure to potentially strong companies in this particular sector.

Investments are Affordable

• The minimum investment amount for this stock is Rs.100, which is easily affordable for every investor.
• SIP with such a low amount gives access to many other investors who second-guess due to the high investment amount.
• It also attracts a wide range of investors who want to invest in such sectoral funds.

Expert Management

• The team leading this stock includes professionals like Mr Shreyash Devalkar and Hitesh Das.
• Their expertise and years of experience in the finance industry boost the chances of this scheme to do better than its peers do.
• The managers identify stocks with high growth potential in the consumption sector.

Vital Points to Know about Consumption Mutual Funds

See every category has its own aspects. While these consumption-related funds are connected to consumer-related industries, some points to focus on are:

1. Focused on Consumption Sectors

• Consumption mutual funds primarily invest in sectors such as fast-moving consumer goods (FMCG), automobiles, retail, consumer durables, healthcare, and entertainment.
• Companies like Hindustan Unilever, Nestlé, Maruti Suzuki, and Titan are typical examples of the kind of companies these funds invest in.

2. Growth Potential

• Rising Income Levels: As income levels rise, especially in developing economies like India. People tend to spend more on consumer goods, which can drive the growth of companies in the consumption sector.
• Increasing urbanization and changes in lifestyle lead to higher demand for a variety of consumer products, boosting the sectors these funds invest in.

3. Defensive Investment Strategy

• Consumption of mutual funds is often considered a more stable or defensive investment. Even during economic downturns, people continue to spend on essential goods and services, which can provide some cushion against market volatility.
• These funds typically experience lower volatility compared to funds focused on cyclical sectors like technology or manufacturing, which can be more sensitive to economic changes.

4. Diversification Benefits

• These funds provide exposure to a broad range of sub-sectors within the consumption space.
• Industries like food and beverages, clothing, and household goods, can help diversify an investor’s portfolio.
• By investing across various sub-sectors, consumption funds reduce the risk associated with downturns in any single industry within the consumption space.

5. Long-Term Investment Horizon

• These funds are suitable for investors with a long-term horizon who are looking to benefit from the steady growth in consumer spending over time.
• With a long-term perspective, investors can benefit from the compounding of returns as consumption patterns continue to evolve and grow.

6. Risks Involved

• Since these funds focus specifically on the consumption sector. They might be more vulnerable to sector-specific risks compared to more diversified funds.
• Shifts in consumer behaviour or economic conditions can impact the performance of companies in the fund’s portfolio.

7. Performance Linked to Economic Health

• The performance of consumption mutual funds is closely linked to the overall economic health and growth prospects of the economy. A slowing economy could potentially reduce consumer spending, affecting the fund’s returns.
• High inflation can reduce consumer spending power, potentially impacting the revenues of companies in the consumption sector.

8. Tax Considerations

• Like other equity mutual funds, consumption mutual funds are subject to long-term capital gains (LTCG) tax at 10% for gains over ₹1 lakh, while short-term gains are taxed at 15%.
• Investors should consider the tax implications when investing, especially if they plan to hold the fund for the long term.

9. Ideal for Risk-Averse Investors

• Investors looking for a relatively stable investment with exposure to equity markets might find consumption mutual funds appealing due to their defensive nature.
• These funds can serve as a good supplement to a diversified portfolio, providing stability and potential growth from a different sector.

10. Professional Management

• Fund managers typically conduct extensive research and analysis to pick stocks that are likely to benefit from changing consumption patterns, ensuring a strategic approach to investing in the consumption sector.
• These funds are actively managed, meaning fund managers adjust the portfolio regularly to align with market trends and consumer demand shifts.

Final Note

If you are an investor who likes to try new sectors to make your portfolio diverse. Start with a SIP to give your portfolio a disciplined direction. In addition, make sure you keep an investment horizon of a minimum of 5-7 years.