Axis Consumption Fund NFO review

Axis Consumption Fund NFO opened for subscription on August 23 and will remain open to the public until September 6.

Here's a quick look at the details of the Axis Consumption Fund NFO.

Axis Consumption Fund NFO: Investment strategy

As the name suggests, the new fund will actively look to invest in companies engaged in consumption and consumption-related or allied sectors.

This will be the 22nd active fund investing in consumption-only companies.

The existing consumption funds manage assets worth Rs 28,048 crore as of July 31, 2024, with Aditya Birla Sun Life India GenNext being the largest fund in this space.

The five largest consumption funds are as follows:

1. Aditya Birla Sun Life India GenNext: Rs 5,786 crore worth of net assets
   
2. Mirae Asset Great Consumer: Rs 4,069 crore worth of net assets
   
3. SBI Consumption Opportunities: Rs 2,679 crore worth of net assets
   
4. ICICI Prudential Bharat Consumption: Rs 2,613 crore worth of net assets
   
5. Tata India Consumer: Rs 2,247 crore worth of net assets

Performance of consumption funds

Consumption funds have been head and shoulders above the broader market. If you consider the median returns of the seven funds with a five-year history, it has beaten the Nifty 500 TRI a whopping 87 per cent of the time. This is based on five-year daily rolling returns.

What's more, these consumption funds have fallen less during market drawdowns. For instance, during the US-China trade war from March 1, 2015, to March 1, 2016, they fell 8.2 per cent, against Nifty 500 TRI's 15.93 per cent. Meanwhile, during the Covid-induced March mayhem in 2020, they fell 23.1 per cent on average, marginally less than the broader market's 23.6 per cent meltdown.

Axis Consumption Fund managers

Shreyash Devalkar: He has been overseeing six actively managed Axis funds, including the most popular Axis Bluechip, followed by Axis ELSS Tax Saver and Axis Midcap.

Hitesh Das: With 12 years of experience, he is currently managing nine funds at Axis, including Axis Equity Saver Fund, Axis Flexi Cap Fund and Axis Focused Fund.

Krishnaa Narayan: A qualified chartered accountant, she will look at foreign securities only.

Our take

While historical data suggest that consumption funds have beaten the broader equity market and have proved slightly less volatile, you should not allocate more than 10 per cent of your money because their portfolios are more concentrated, making them riskier.

Instead, look at funds that diversify your money across multiple sectors. This way, your money won't be reliant on the performance of a few sectors or a particular theme. Furthermore, diversified funds such as flexi caps and multi caps also invest in consumer companies, offering you exposure to them as well.

Also read: Three questions to ask before investing in an NFO