personal finance

Make tactical allocation to BNP Paribas India Consumption Fund


MUMBAI: Volatility, trade wars, rich valuations and elections in less than a year make fund managers believe consumption is one structural story that investors can ride on. The Nifty India Consumption Index is amongst the best performers giving 18.70% in the last one year.

After ICICI Prudential Mutual Funds close end Bharat Consumption Fund Series 1-4, the latest to enter the consumption space through an open end fund is BNP Paribas India Consumption Fund. Offered at Rs 10, per unit, the new fund offer (NFO) will be open from August 17-31. The fund will invest in companies across market capitalisations that follow the business to consumer model, have a strong competitive advantage and high earnings visibility over the long run. Even though some stocks are expensive on valuation, the fund manager believes that consumption being a secular theme, it will grow regardless of market cycles and earnings growth is likely to remain strong. The fund manager will invest in secular growth stories aided by rising aspirations, high income levels, high working age population, digital influence, financialisation, policy reforms and urbanisation to name a few. Given the thematic nature of this fund, wealth managers believe this is not a fund for first time investors, but for investors who understand the risks associated with thematic funds. “Ïnvestors can make a small tactical allocation to such themes with a medium term view. For their long term portfolio, diversified equity mutual funds which can invest across the spectrum will continue to be the best bet, ”says Amol Joshi, Founder, Plan Rupee.





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