FMCG Mutual Funds | Top 5 FMCG Sector Funds to invest in India

FMCG MUTUAL FUNDS

The FMCG sector mutual funds are a type of equity funds that invest in entities that are involved in the consumption goods i.e. consumer goods. FMCG stands for Fast Moving Consumer Goods which is diversified into many products that are used by consumers on a day-to-day basis. Investors who are looking forward to investing in this sector can opt for these funds and stay invested for a long tenure as they tend to fetch good and above-par returns in the long run. 

In this article, we are going to talk about the FMCG sector in India and various important aspects of FMCG funds to gain a better understanding. Let’s get started. 

FMCG SECTOR IN INDIA

FMCG is a sector which shows the sentiments of the public. There are many multinational and home grown entities which give the Indian consumer a wide choice and spectrum to opt form. The sector is expected to grow at the CAGR of nearly 21%. 

The rural area consumption is increasing consistently with the mean income of households rising. Broadly the sector offerings are divided into Healthcare, food and beverages, personal care and household. Household/personal care amounts to 50% shares whereas F&B and Healthcare amount to 19% and 31% respectively. 

These funds carry a medium to high amount of risk and investors can take a long term view on these funds to gain decent returns. 

MERITS OF INVESTING IN FMCG MUTUAL FUNDS

1. Check on turbulence:

FMCG funds are less volatile than that of equity funds. The simple logic behind this is that there are very few choices available to consumers, they have to approach these FMCG entities only. There are very few brands in India and with such a small number, the FMCG companies are serving a very massive population of India and sharing a reasonable proportion of growth in the GDP along with the National Income.

2. Long run vision:

Like other mutual funds, FMCG funds also extend their true returns and benefits in the long term. May it be tobacco or food companies, all have shown profits and growth over the past 2 years. Therefore, shifting the axis on these FMCG companies, the FMCG mutual funds look forward to optimally using the funds of their investors in the coming years. 

3. Variegated Options:

In FMCG funds, investors have the option of both dividends and growth. Growth options in FMCG funds imply that investors will get a lump sum amount as the corpus. On the other side, the dividend option of the FMCG mutual fund facilitates the transfer of the funds to your account as and when the dividend is declared during the investment period. 

4. High performance:

As consumer needs are growing day by day with the increasing standard of living, so is the investment in through the FMCG mutual funds, These companies are performing very well and for this reason, FMCG funds are blooming providing best returns with the scanty options available for investing. 

THINGS TO CONSIDER 

1. Past Performance:

Measuring the performance of the fund in both bearish and bullish phases is a mandate as it helps investors in selecting reliable funds. FMCG funds have grown in recent times and hence are very popular among investors. India as a developing economy has seen some high returns from investments in this field because of increasing standard of living. Nevertheless, it must be vouched if a fund can continue to perform in upcoming market cycles. 

2. Involved Costs:

There are different costs involved in funds such as entry and exit load , expense ratio etc. Investors must review these costs before going forward with investments. 

3. Financial Goals:

Setting up a goal before investing is the foremost and most important decision to make. It is very significant to evaluate that the fund objective is aligned to the financial goals. If investors can analyse the FMCG sector and are up for taking risk then they may invest in these funds as it is a high risk - high return fund. 

4. Other basics:

There are other different influencing factors such as the Assets Under Management, Net Asset Value among others which are to be viewed to take comfort over reliability and investor engagement in the fund. 

TOP 5 FMCG FUNDS 

WHO SHOULD INVEST?

1. Investors have a high risk appetite as the returns are solely dependent on the performance of a single sector which is FMCG.
2. Investors having long term investment tenure (at least 5 to 6 years) as the equity securities are quite sensitive to market fluctuations in the short tenures.
3. Before opting for investment in these funds, investors should do proper research and analysis of the future and current market situation and growth prospects of the companies in the funds and sector. The decision should be based on multiple factors related to the sector.