Media and entertainment funds have been on a roll over the last 12 months courtesy the digitisation drive that the country is currently witnessing. In this period, while the Sensex has given a return of 13 per cent, media and entertainment funds have doubled it to touch almost 26 per cent.
Not just digitisation of the cable industry, there has been a consolidation in the exhibition space (movies and cinemas) too which has resulted in improved returns from such funds.
Don’t jump the gun
Looking at the past record, like all other sectoral funds, it has not been a smooth sailing for media and entertainment funds as their long term returns look dismal. If you had invested Rs 100 at the start of 2008 it would now be down at Rs 59.62 in Media and Entertainment Index against Rs 95.71 in Sensex. Prior to 2012, media and entertainment funds consistently gave below average returns.
But things started to look positive for the sector in 2012 when digitisation was introduced and revenues of such companies started rising. If you had invested Rs 100 in Media and Entertainment Index at the start of 2012 you would have been sitting on Rs 159.38 at the end of that year. Had you done the same in Sensex you would have got Rs 125.19.
So, what’s the future for such thematic schemes?
Sailesh Raj Bhan, fund manager of Reliance Media and Entertainment fund, says: “Firstly, as there is revival in the overall economy, advertisement growth might return in the sector which was missing in the past 3-4 years. Secondly, with exhibition and distribution being consolidated, revenue streams will be more recurring and business models will become more solid. Earlier the money was lost in the system, so the recurring stream will increase as subscription goes up which in turn will be important development for the industry.”
Apart from this, fund managers also believe that there might be infusion of capital from foreign players.
“In the next few years, once there is stabilisation in earnings there might be activity in the mergers and acquisitions and possibility of global PE players entering the market. Looking at the current scenario we believe that this will be high growth sector in the economy and likely to give over 20 per cent returns in the next few years,” says J Venkatesan, fund manager of Sundaram Entertainment Opportunities.