Whether it was urban middle class and rural consumer distress that dominated last Lok Sabha election results analyses or the stark underperformance of quality consumer stocks in a market that saw “hot” sectors like defence, railways, PSUs etc rocket upwards, there were enough reasons not to own the consumption theme.
Fizz going out of hot themes in the market and green shoots now visible in rural and urban middle class consumption offer a sound launch pad for Bajaj Finserv MF to launch its Consumption Fund.
Consumer stocks have corrected down to historical valuation levels and thanks to their underperformance over the last year, are also seeing much narrower premiums to market valuations than historical averages.
Nimesh sees 4 megatrends within consumption which will drive portfolio strategy and stock selection: consume more, consume better, consume well and consume easy. Each has distinctive businesses catering to the megatrend.
Companies are reporting pickup in rural demand across categories and urban middle class consumption is also turning around. These trends take a couple of quarters to become fully visible as consumers don’t change habits overnight.
Nimesh says this fund launch continues the AMC’s track record of launching funds at a time which gives investors an opportunity to have a good investing experience instead of launching funds in hot trending themes which may then disappoint investors.