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Overview
Consumption mutual funds invest around the theme of consumer spending.
Their portfolios can include businesses that benefit when households spend more on products and services, ranging from everyday necessities to automobiles, travel, retail, consumer durables, and discretionary purchases.
Because consumption is a broad theme, the exact portfolio can vary substantially between funds.
Explained
A consumption mutual fund is generally a thematic equity scheme focused on companies expected to benefit from consumer demand.
Potential portfolio areas can include:
The exact definition of the consumption theme depends on the scheme's stated investment mandate.
Explained
The fund manager identifies companies whose revenues and profits are meaningfully linked to consumer spending.
The investment team may evaluate factors such as:
For example, rising disposable incomes may support demand for discretionary products. High inflation, on the other hand, can reduce household purchasing power or increase companies' input costs.
Suitability
Consumption funds may suit investors who:
A compelling economic theme does not automatically translate into attractive investment returns. Stock valuations and company execution still matter.
Advantages
These funds allow investors to participate in businesses linked to household consumption.
Consumption is wider than a single industry. A portfolio may include businesses from retail, automobiles, FMCG, travel, durables, and other consumer-facing areas.
Rising incomes, urbanisation, formalisation, digital commerce, and changing spending patterns can create opportunities for consumer-facing companies.
The fund manager can select businesses across different industries rather than requiring investors to identify individual consumer stocks.
Before you invest
Although consumption can span several industries, the companies can still respond to similar economic forces. Weak consumer demand can affect multiple portfolio holdings simultaneously.
Higher inflation can reduce purchasing power and raise input costs for businesses. The ability to pass those costs to consumers varies by company.
Some businesses depend heavily on rural consumption, while others derive more revenue from urban households. Understand what drives the fund's portfolio.
Consumers usually have more flexibility to delay purchases of cars, appliances, holidays, or premium products than essential goods. The portfolio's mix can therefore affect its sensitivity to economic slowdowns.
High-quality consumer businesses can sometimes trade at expensive valuations. Even a strong company can produce disappointing investment returns if purchased at an excessive price.
Taxation
Consumption Funds generally qualify as equity-oriented mutual funds when they meet the applicable requirements.
For qualifying units held for more than 12 months, gains are generally classified as long-term capital gains.
Long-term gains covered by Section 112A are generally taxed at 12.5% above the applicable annual exemption threshold.
For qualifying units held for 12 months or less, gains are generally treated as short-term capital gains and taxed at the applicable special rate under Section 111A.
Investors should verify current tax provisions before redeeming units.
Step by step
Good to know
It is a thematic equity fund that invests primarily in companies expected to benefit from consumer spending and related trends.
Depending on their mandate, they may invest in FMCG, automobiles, retail, consumer durables, travel, hospitality, entertainment, and other consumer-oriented industries.
Not necessarily. FMCG represents one part of consumer spending, while a broader consumption theme can include several discretionary and service-oriented industries.
Yes. They carry equity-market risk and thematic concentration risk. Consumer demand, inflation, economic conditions, and valuations can influence performance.
Most open-ended thematic funds generally allow SIP investing, subject to the individual scheme's conditions.
Recap
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FUND
T
Tata India Consumer Fund Direct GrowthEquity Consumption₹55.15
0.2%
3.99%
14.41%
13.72%
Mirae Asset Great Consumer Direct Plan GrowthEquity Consumption₹111.09
0.3%
-5.03%
10.49%
12.56%
C
Canara Robeco Consumption Fund Direct Plan GrowthEquity Consumption₹123.63
0.03%-4.15%
10.34%
11.28%
UTI India Consumer Fund Direct Plan Payout Inc Dist cum Cap Wdrl OptionEquity Consumption₹54.4
0.54%-4.58%
9.83%
8.81%
Baroda BNP Paribas India Consumption Direct GrowthEquity Consumption₹33.86
0.53%-7.17%
9.77%
10.62%
Mahindra Manulife Consumption Fund Direct GrowthEquity Consumption₹24.7
0.37%-6.45%
9.71%
11.37%
I
ICICI Prudential Bharat Consumption Fund Direct CumulativeEquity Consumption₹26.62
0.3%-5.57%
9.58%
13.09%
Nippon India Consumption Fund - Direct Plan - Growth PlanEquity Consumption₹216.6
0.18%-7.25%
9.16%
12.52%
Sundaram Consumption Fund Direct Plan - Growth OptionEquity Consumption₹104.55
0.1%-5.97%
9.01%
11.16%
Aditya Birla Sun Life Consumption Fund Direct Plan GrowthEquity Consumption₹235.1
0.39%-7.69%
8.19%
9.56%
T
Tata India Consumer Fund Direct Rnvstmnt of Inc Dist cum Cap WdrlEquity Consumption₹53.45
0.2%0.78%
13.22%
13%
Mirae Asset Great Consumer Direct Plan Payout of Income Distribution cum capital withdrawalEquity Consumption₹66.7
0.3%-5.03%
10.02%
12%
C
Canara Robeco Consumption Fund Direct Plan Payout of Income Dist cum Cap WdrlEquity Consumption₹80.24
0.02%-4.38%
10.16%
11.15%
UTI India Consumer Fund Direct Plan Reinvestment Inc Dist cum Cap Wdrl OptionEquity Consumption₹54.4
0.54%-4.58%
9.83%
8.81%
Baroda BNP Paribas India Consumption Direct Payout Inc Dist cum Cap WdrlEquity Consumption₹21.54
0.53%-7.96%
8.9%
9.94%
Mahindra Manulife Consumption Fund Direct Reinvestment of Inc Dis cum Cptl WdrlEquity Consumption₹17.49
0.37%-7.18%
9.2%
10.84%
I
ICICI Prudential Bharat Consumption Fund Direct Payout of Inc Dist cum Cap WdrlEquity Consumption₹17.08
0.29%-6.39%
8.78%
12.28%
Nippon India Consumption Fund - Direct Plan Payout of Income Distribution cum capital wdrlEquity Consumption₹53.05
0.17%-7.81%
8.65%
12.12%
Sundaram Consumption Fund Direct Plan Reinvestment of Income Distr cum Capital WtdrwlEquity Consumption₹27.8
0.1%-6.96%
8.25%
10.58%
Aditya Birla Sun Life Consumption Fund Direct Plan Payout Inc Dist cum Cap WdrlEquity Consumption₹45.24
0.37%-8.08%
7.72%
9.13%
Showing 1–20 of 67
