June 6, 2012 10:31 pm
Why FMCG funds are doing well even in the times of down turn?
If you see the past returns of FMCG funds icic prudential fmcg -g returns were nearly 22% for 1 yr and around 20% for SBI magnum fmcg- g.
FMCG is cycle independent unlike many sectors that have sharp ups and downs. FMCG ‘growth’ will remain stagnant only when the population growth slows down considerably and we are far away from that point.
As with any investment in finance sector funds have high reward high risk. For someone whose portfolio can take some risk FMCG and Sector funds are usually recommended. But note that a bulk of the population does not have the ability to take high risk so non-sector funds are recommended.
The outperformance of the FMCG Funds are primarily because of the rising income levels of the consumers and also to the fact that more and more FMCG companies are now penetrating in to the rural markets with wider variety of products.
Try to be a layman and understand this concept clearly, as population will rise more will be the demand for the FMCG. Think about yourself, what FMCGs you bought this year and and compare that with the prior years. You are bound to see the difference. Further, as new westernised products will come in India people will certainly go for them.
According to ASSOCHAM the FMCG sector is 4th largest in the Indian economy. So by looking at its sheer size one can definately understand this sector has got a big presence in India with big MNCs and also big domestic companies.
Among the two FMCG funds, SBI Magnum is the fund you should watch for. The fund invests in Fast Moving Consumer Durable stocks across different market capitalisation.
The economic growth in India is bringing lifestyle changes to common Indian life. Therefore the demand for basic consumables are all set to rise even more in future.
But having said that, one must also understand that sectoral funds should be a part of your portfolio and shouldnt be your core portfolio.
Try to allocate 5-10% of your portfolio in these funds for good returns.
these two funds have provided good returns over 5 years as we can see from above table
Dear Rajan, please check & post 5Y return for following funds –
DSP Top 100
HDFC Top 200
Birla Sunlife Fr’line Eq.
Frankling India Bluechip
Quantum Long Term Eq.
IDFC Prem. Eq.
ICICI Pru Focussed Bluechip
here are the returns
DSPBR Equity 5-Year 8.35 |
DSPBR Top 100 Eqt Reg-G 5-Year 8.33 |
HDFC Eq-g 5-Year 9.06 |
hdfc top 200-g 5-Year 10.11 |
BSL Frontline Eqt-G 5 year 7.56 |
Franklin india bc -g 5 year 7.83 |
Quantum Long Term Eq. 5 year 10.38 |
idfc pre eq plan A- G 5 year 15.31 |
icici pru focused bluechip eq retail 3 year 11.84
Dear Rajan, Now can you co-relate the 2 data set i.e. 5Y return for FMCG funds & 5Y return for other funds?
Interestingly similar trends of outperformance were their in pre 2008 crash era between Infra funds & diversified Eq. funds. Now you can look yourself where the infra funds are standing today.
If you look back in history, the same can be tested during dotcom bubble era i.e. 1999-2000 period.
Please make your own conclusion.
icici pru fmcg returns
As on 06 Jun 2012 Fund Category
Year to Date 16.00 18.02
1-Month -2.82 -2.65
3-Month 10.29 11.32
1-Year 24.86 23.92
3-Year 32.52 35.20
5-Year 16.07 19.39
Return Since Launch 17.88 —
SBI Magnum fmcg
s on 06 Jun 2012 Fund Category
Year to Date 20.04 18.02
1-Month -2.49 -2.65
3-Month 12.35 11.32
1-Year 22.98 23.92
3-Year 37.87 35.20
5-Year 22.71 19.39
Return Since Launch 13.79
Rajan- Check this thread.
Dear Rajan, can you tell the performance of same funds for prev. periods also i.e may 2010 to 2011, instead of May 2011 to May 2012?
The reason of good performance for FMCG funds lies in the fact that no matter what’s the situation of economy your basic consumption of FMCG product ‘ll remain same i.e. for Shampoo, Soap, Biscuits, confectionery to name a few. This continuous consumption is helping the FMCG cos. & then to FMCG funds to show a good performance.
Please do not base your judgement for past 1Y or 2Y performance in Eq. funds & that too sectoral.
In the long term, only the good diversified Eq. fund ‘ll provide better return.
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