Axis Consumption Fund - NFO Details

As the nation’s demographic profile shifts, with a median age of just 28 years, India boasts a young, dynamic, and productive working-age population. This demographic advantage, coupled with rising income levels, is fueling greater expenditure on premium products and services, creating a fertile ground for businesses to thrive.

Urbanization, digitalization, and increasing access to financial tools such as UPI, credit cards, and EMI options are further propelling consumer spending across the country, even in remote areas. As more Indians aspire to upgrade their lifestyles, the demand for a broader range of products and services is set to soar.

Axis Consumption Fund NFO is strategically positioned to capitalize on these trends, offering investors a unique opportunity to participate in India’s consumption-driven growth story. By focusing on sectors that stand to benefit from increased consumer spending, we aim to deliver robust returns while contributing to the nation’s economic development.

Details of the Axis Consumption Fund NFO:

Axis Consumption Fund is an open-ended thematic fund. It opens on August 23, 2024, and closes on September 6, 2024. The minimum investment is ₹100, and in multiples of ₹1 thereafter.

Investment Objective and Strategy

Objective:

To provide long term capital appreciation from an actively managed portfolio of equity and equity related securities of companies engaged in consumption and consumption related sector or allied sectors.

Investment Strategy:

The Scheme aims to provide long-term capital growth from an actively managed diversified portfolio of equity & equity related securities of companies engaged in consumption and consumption related sector or allied sectors.  The indicative list of sectors that the scheme would invest in:  

• FMCG 
• Consumer Non-Durables 
• Automobile and Auto Components 
• Telecommunication 
• Consumer Services 
• Media & Entertainment 
• Consumer Durables 
• Textiles 
• Healthcare
• Power 
• Realty/Hotels 

For determining list of the companies eligible under consumption theme the AMC will consider the basic Industry list published by NSE Indices for NIFTY India Consumption Index. Please refer link https://www.niftyindices.com/Methodology/Method_NIFTY_Equity_Indices.pdf” for current index methodology document published by NSE Indices. 

We are witnessing increase in consumption in India given the shift from unorganized to organized, premium categories and narrowing rural and urban consumption gap. We believe this will drive strong consumption spends in the coming decade.   

The Scheme will invest across market capitalization. The fund manager will endeavor to allocate to companies using a bottom up approach while taking exposure in sectors which will benefit from the economic trends in consumption. The fund manager may at his discretion invest up to 20% of the scheme assets outside the consumption theme based on his qualitative and quantitative assessment of the investment opportunities. The scheme can also invest in foreign securities or overseas ETF related to consumption theme. 

The AMC employs a ""Fair value"" based research process to analyse the appreciation potential of each stock in its universe (Fair value is a measure of the intrinsic worth of a company). The universe of stocks is carefully selected to include companies having a robust business models and enjoying sustainable competitive advantages as compared to their competitors. The term Consumption refers to the utilization of goods and services by individuals, households, corporates and government. It encompasses a wide range including but not limited to purchasing, using, and disposing of goods and services.

Why Invest in Bank of India Business Cycle Fund?

It is an open-ended equity scheme that adheres to the consumption theme, aiming for capital appreciation over the long term. The fund invests in equities and equity-related securities of companies within the consumption sector or related sectors. By diversifying risk and targeting long-term wealth creation across various sectors under the consumption theme, this fund aligns with the broader economic growth of India, which is driven by increasing consumption patterns. The consumption index covers over 8 sectors and 70 basic industries, reflecting its broad scope. Historically, this sector has shown strong potential for long-term returns and has also exhibited lower drawdowns during market downturns, making it a beneficial addition to an investment portfolio.

Strength and Risks Bank of India Business Cycle Fund

Strengths:

•    Spread risk and target long-term wealth creation across various sectors within the consumption theme. The consumption index is based on more than 8 sectors and 70 basic industries. 
•    Align your investments with India's economic growth driven by expanding consumption patterns.
•    The sector has demonstrated strong long-term return potential while also experiencing lower drawdowns during market downturns, making it a valuable addition to your portfolio.
•    Benefit from experienced fund managers using a quality-focused and bottom-up approach.
•    Tap into India's growth driven by urbanisation, digitalisation, and a young population.

Risks:

The scheme aims to generate capital appreciation by investing in a diversified portfolio of companies engaged in consumption and related activities. The underlying principle of investing in a thematic fund is that it focuses on companies aligned with a specific theme, in this case, consumption. However, this focus also means that the fund's ability to invest in other sectors is limited. A portfolio based on the consumption theme may experience higher volatility compared to other diversified equity-oriented schemes. Because the scheme primarily invests in consumption-themed securities, it is likely to face higher market liquidity risks than a typical diversified equity scheme.

Moreover, when investing in equities, there's a risk that companies within this specific sector may not meet their expected earnings targets, or that unexpected changes—whether due to government policies, macroeconomic factors, or company-specific issues—could occur. Such developments could negatively impact investment outcomes. Therefore, investing in a sector or thematic-specific fund might involve greater potential volatility and risk compared to more broadly diversified funds.