ICICI Pru’s new Rural Opportunities Fund appears to be another well-timed thematic launch, continuing the fund house’s track record of presciently timed thematic fund launches.
Many building blocks in the form of rural infrastructure, focus on creating non-farm jobs, direct benefit transfers without leakages, ease-of-living measures, subsidized/free food have been steadily implemented over the last few years.
Two catalysts are now spurring income growth that is creating a lot more disposable income in the hands of rural India than perhaps ever before:
- Focus on welfare measures at state and central levels to address rural angst is putting steady monthly cash flow directly into households’ bank accounts, and
- Robust farm output this year on the back of good monsoons
Tractor and two-wheeler demand growth – both leading indicators of rising discretionary demand – are clocking robust growth numbers.
FMCG companies are reporting healthy growth in rural demand– which has been muted for some time. Rising incomes are being met by rising aspirations, fuelling healthy consumption growth across categories.
Rural India is no longer about tractors, bikes and agri-inputs. The breadth of sectors that benefit from rural revival include autos, FMCG, home improvement, healthcare, consumer discretionary, agri-based businesses, banking, insurance and many more.
ICICI Pru’s new Rural Opportunities Fund will adopt an unconstrained approach to portfolio construction with broad diversification across sectors and ability to nimbly move across cap-sizes in the quest for delivering alpha.