Slowing consumption has weighed on the performance of consumption funds over the past year. The ongoing Covid-led lockdown has added further pressure on the funds. Currently, there are seven funds in the category and these have delivered an average return of negative 11.5 per cent over the past one year.
Among the funds, BNP Paribas India Consumption, which was launched in September 2018, has been the top performer over the past year, capping its NAV decline to about 2 per cent, while others recorded much higher losses.
The fund is overweight on financial, services and construction sectors, but underweight on FMCG, automobile and consumer durable sectors.
HDFC Bank and ICICI Bank are its top holdings.
SBI Consumption Opportunities, a veteran in the FMCG category, has delivered a negative return of 22 per cent in the past one year. The scheme has allocated 30 per cent to FMCG stocks that have healthy fundamentals.
The fund is overweight on textiles and services sectors.
After a strong show in 2017, the fund has been lacklustre over the past two years which has kept the past three-year performance muted.
Mirae Asset Great Consumer, that delivered a negative return of 15.5 per cent, has invested about 39 per cent in FMCG stocks, and is also overweight on financials and consumer durable sectors. The scheme is underweight on automobile, communication and services sectors.
The top holdings are HDFC Bank, Tata Consumer Products and ITC with about 6 per cent exposure to each.
Over three- and five-year periods, ICICI Prudential FMCG has clocked positive returns of 2.9 per cent and 6.53 per cent, respectively, on an annualised basis, but over the past one year, it has slumped 10.7 per cent.
It predominately invests in FMCG stocks, and a small portion is allocated to services, chemicals and consumer durable sectors.
Thematic funds, in general, are risky owing to their narrow focus. Consumption funds, in particular, have largely concentrated portfolios.
The near-term downtrend in consumption can, hence, continue to impact the funds’ returns.
A revival in the economy and consumption can aid the performance of these funds in the long run.