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POSTED BY ON May 21, 2012 3:54 pm COMMENTS (5)
I am seeing FMCG Sector mutual Funds giving better Returns than Large .midcap and multicap
Is it good to invest on FMCG Mutual Funds, if Yes Which is teh best one .For e.g ICICI pru FMCG or SBI magnum FMCG
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Dear Rajesh,
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.
HI JGMM /Ashal / WC,
Thanks all for Valuable input and suggestion
Ideally you should try and avoid secotoral funds. FMCG are in doing good, when market is in boom, it could be infra that may outshine?
Equity diversified or equity opportunity fund are better bet in long run.Fund manager will take necessary action.
Dear Rajesh, please stick to multi cap funds like HDFC Eq. or Quantum Long Term Eq. fund. You ‘ll get better returns in the long term.
Thanks
Ashal
FMCG – Fast Moving Consumer Goods – that includes items like tooth paste, soaps,shampoos etc. is a defensive sector. Whether markets go up or down people have to consume goods like Toothpaste,soaps etc.So when the markets fall FMCG stocks go up usually so do FMCG schemes. When markets are rising the FMCG stocks/schemes will mostly lag the other sectors.
You usually buy FMCG schemes when the markets are heating up. Hence buying FMCG schemes now may or may not yield great returns.