This week in MFs: Asset managers remain upbeat on consumption theme

Volatility, expensive valuations and elections in less than a year have prompted fund managers to believe that consumption is one structural story that investors can ride on. 

The Nifty India Consumption Index is among the best performers, giving an 19 percent return in the past one year.

Going by the positive outlook on consumption, fund houses have been floating schemes of investing in the consumption sector.

After ICICI Prudential Mutual Funds’ closed-end Bharat Consumption Fund Series 1-4, the latest fund house to join the bandwagon is BNP Paribas Mutual Fund.

On Aug 17, BNP Paribas Mutual Fund has launched BNP Paribas India Consumption Fund, which will remain open for subscription until Aug 31.

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This fund will invest in companies that are expected to benefit from the growing consumption needs of Indian consumers. The fund manager intends to identify companies. 

“India has a large and growing consumer backed by over one billion consumers across income segments. Rising household income, urbanisation, decline in traditional joint-family structure are some of the key contributors of this growth,” explained Anand Shah, Deputy Chief Executive Officer and Head of Investments, BNP Paribas Mutual Fund.

Fund managers said that India is expected to be the third-largest consumer market in the world. India’s 130-crore population, which enjoys a demographic advantage with proportion of working age population over 50 percent, also makes consumption a structural story for a long period. The theme offers twin benefits as it is both cyclical and defensive. 

Among other developments this week, AMFI held its second Mutual Fund Summit in Mumbai.

Addressing the summit, the Securities and Exchange Board of India Chairman Ajay Tyagi expressed concerns over the growing concentration of assets under management (AUM) among the top seven players.

He emphasised on the need of having more competition to ensure uniform growth among industry players.

HDFC Chairman Deepak Parekh also addressed the gathering at AMFI Summit and said that junkets or incentive tours have become common practice across the financial services industry and should be stopped as these rewards create an imbalance in the market.

He said that the SEBI should take measures to discourage asset management companies from rewarding distributors with such tours.