Axis MF launches Axis Consumption Fund. A look at other funds in same league

Axis Mutual Fund introduced a new investment opportunity called the Axis Consumption Fund on Thursday. The new fund offer (NFO) aims to take advantage of increasing incomes, fast urbanisation, and a growing middle class in India. Investors can expect a variety of carefully selected stocks in this fund, which are expected to thrive due to the country's expanding consumption patterns.

Axis Mutual Fund anticipates a strong and steady expansion in consumption levels across various sectors over the next decade. This growth is projected to be fueled by increasing aspirations in urban and rural areas, leading to a sustained rise in demand. Key drivers of growth in the consumption sector include escalating incomes, rapid urbanisation, and evolving consumer choices. Multiple industries, including consumer goods, retail, automotive, and services, are poised to benefit from these trends, supported by advancements in technology and the widespread availability of e-commerce platforms.

“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. 

He added: “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."

Features of Axis Consumption Fund

> NFO Time: August 23 to September 6 
> 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: Hitesh Das and Shreyash Devalkar, Krishnaa Narayan (for Foreign securities) 

Investment focus

Thematic Approach: The investment fund's primary focus is on companies that are poised to capitalize on the changing consumption patterns in India. The fund aims to identify and invest in businesses that are positioned to benefit from the evolving consumer landscape of the country.

Bottom-Up Stock Selection: The fund managers adopt a meticulous bottom-up approach to stock selection. They assess individual companies based on their unique potential and growth prospects, focusing on identifying strong investment opportunities that align with the fund's objectives.

Diversification Beyond FMCG: In addition to traditional fast-moving consumer goods (FMCG) companies, the fund extends its investment scope to include sectors such as consumer discretionary, retail, automotive, and real estate. This diversified approach allows the fund to capture opportunities across various industries within the consumer sector, beyond just the FMCG giants.

Other funds in same segment

1. Nippon India Consumption: Nippon India Consumption Fund has outperformed the Nifty India Consumption TRI by 2-6 percentage points over the medium to long term in terms of point-to-point returns. The scheme's five-year compound annual growth rate (CAGR) stands at 26.6%, positioning it as one of the top performers compared to its peers and other equity categories.

Nippon India Consumption Fund Direct-Growth has achieved notable financial performance metrics in recent history. Over the last year, the fund has delivered impressive returns of 44.97%. Since its inception, it has maintained an average annual return of 16.38%. An intriguing aspect of this fund is its capability to double the invested amount every three years.

In terms of consistency in generating returns, Nippon India Consumption Fund Direct-Growth aligns well with its peers in the investment sphere. Furthermore, it has exhibited above-average skills in managing losses effectively during market downturns.

The fund has allocated a significant portion of its assets in sectors such as Consumer Staples, Services, Automobile, Materials, and Communication. It has notably limited its exposure in Consumer Staples and Services when compared to other funds within the same category.

The top 5 holdings of Nippon India Consumption Fund Direct-Growth are in prominent companies including ITC Ltd., Bharti Airtel Ltd., Hindustan Unilever Ltd., Avenue Supermarts Ltd., and Jubilant FoodWorks Ltd.

2. SBI Consumption Opportunities Fund: SBI Consumption Opportunities Fund Direct-Growth is a thematic-consumption mutual fund scheme with an impressive Rs 2,679 Crores worth of assets under management (AUM) as of June 30, 2024. The fund has shown significant growth with returns of 42.83% in the last year and an average annual return of 19.11% since its launch. Moreover, it has a track record of doubling the invested amount every 3 years.

This fund's consistent performance sets it apart from others in its category, demonstrating a strong ability to generate returns steadily and mitigate losses during market downturns. SBI Consumption Opportunities Fund Direct-Growth primarily allocates its investments in sectors like Consumer Staples, Consumer Discretionary, Services, Textiles, and Automobiles, with a lower exposure to Consumer Staples and Consumer Discretionary sectors compared to peers.

The top 5 holdings of this fund include Ganesha Ecosphere Ltd., Bharti Airtel Ltd., Jubilant FoodWorks Ltd., ITC Ltd., and Hindustan Unilever Ltd., reflecting a diversified portfolio with investments in key companies across various sectors.

3. Mirae Asset Great Consumer Fund Direct-Growth is a mutual fund scheme focused on the thematic-consumption sector. As of June 30, 2024, it has assets worth Rs 4,069 Crores under management. Over the past year, the fund has delivered impressive returns of 44.46%, and since its launch, it has maintained an average annual return of 20.23%. Investors have seen their investments double every 3 years with this fund.

In terms of performance compared to other funds in its category, Mirae Asset Great Consumer Fund Direct-Growth has demonstrated consistent returns and above-average ability to limit losses in a declining market. The fund primarily allocates its resources to sectors such as Consumer Staples, Services, Automobile, Consumer Discretionary, and Materials, with a lower exposure to Consumer Staples and Services compared to its peers.

The fund's top 5 holdings include companies like Bharti Airtel Ltd., ITC Ltd., Hindustan Unilever Ltd., Maruti Suzuki India Ltd., and Trent Ltd.