ITI Bharat Consumption Fund: Your Gateway to India’s Expanding Consumer Market

ITI Mutual Fund has launched ITI Bharat Consumption Fund, it is an open-ended equity scheme following consumption theme.

The Union Budget 2025 has focused on fueling India's economic growth by prioritizing sectors like infrastructure, agriculture, and consumption. With policies aimed at boosting purchasing power and promoting domestic manufacturing, the government is setting the stage for sustained growth in the consumption sector, which has already been a key driver of India's GDP expansion.

India's consumption boom is attracting significant investor attention, driven by an expanding middle class, rising disposable incomes, and increasing urbanization. This has created immense opportunities in sectors like FMCG, retail, and consumer durables, making it an attractive area for long-term investment.

[Read: Top 5 Mutual Funds with Strong Holdings in India's Consumption Sector]

In line with this growing interest, the launch of the ITI Bharat Consumption Fund as a New Fund Offer (NFO) provides a timely opportunity for investors to capitalize on India's consumption growth.

What will be the investment strategy for ITI Bharat Consumption Fund?

ITI Bharat Consumption Fund intends to invest predominantly in equities and equity related securities of companies that are likely to benefit directly or indirectly from consumption and related activities or allied sectors.

The Consumption theme would represent the domestic consumption sectors which are expected to benefit directly or indirectly from the consumption led demand. The Scheme will have an actively managed investment strategy.

The portfolio will be built utilising a bottom-up stock selection process, focusing on appreciation potential of individual stocks from a fundamental perspective amongst other variables considered for the same. The investment strategy revolves around capturing the growth potential within the Indian consumption sector. This strategy primarily focuses on investing in companies that are poised to benefit from the ongoing consumption boom, driven by rising income levels, a young population, and shifting consumer preferences.

The fund manager may also focus on identifying emerging consumption trends, such as digital consumption or evolving lifestyle habits, to capture opportunities in newer segments.

The scheme may invest in Debt & Money Market Instruments primarily for Liquidity purposes as well as for the purpose of meeting redemptions. However, the debt part of the portfolio may not necessarily be invested in domestic consumption theme. Investment in debt securities will be guided by credit quality, liquidity, interest rates and their outlook.

How will the scheme allocate its assets?

Under normal circumstances, ITI Bharat Consumption Fund will hold an allocation of 80% to 100% in Equity and Equity Related Instruments of companies engaged in consumption and consumption related activities or allied sectors, 0% to 20% in Other equity and equity related securities, 0% to 20% in Debt and Money Market Instruments and 0% to 10% in Units issued by REITs and InvITs.

Should investments in ITI Bharat Consumption Fund be considered?

ITI Bharat Consumption Fund focuses on consumption sector, aiming to benefit from these structural growth trends by investing in companies that are well-positioned to capitalize on the expanding consumption story in India.

The consumption sector has seen significant growth due to a rising middle class, increased urbanization, and changing consumer preferences. With a large and youthful population, the demand for consumer goods and services is expected to continue its upward trajectory.

However, potential investors should consider several factors, sector-specific risks should be weighed. While the consumption sector is generally stable, it is susceptible to cyclical fluctuations in the economy, inflation, and regulatory changes. Additionally, consumer sentiment can be influenced by external factors such as economic slowdowns, global events, or changes in government policies. Ideally, the scheme's performance is highly dependent on the fund manager's ability to identify consumption stocks with high growth potential.

While investing in sector-specific funds like ITI Bharat Consumption Fund can offer substantial growth potential, it also exposes investors to concentration risk. While the fund has promising potential due to the growth of the Indian consumption sector, it is essential for investors to conduct thorough due diligence and align it with their long-term financial objectives.