What are FMCG Mutual Funds?
FMCG (Fast-Moving Consumer Goods) Mutual Funds are a type of thematic fund. They invest primarily in the stocks of companies that produce everyday consumer essentials, such as food, beverages, toiletries, and household products.
These funds focus on a defensive sector, as the demand for these goods remains relatively stable regardless of economic conditions. They aim to provide investors with steady growth by investing in well-established, household brand names.
Best FMCG Mutual Funds
Below is a curated list of top-performing FMCG sector mutual funds, selected based on their historical returns, AUM, and expense ratio. You can analyse and start investing with a lump sum or SIP on INDmoney.
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AUM ₹2027 Cr •
Expense 1.26%
How do FMCG Mutual Funds work?
FMCG funds pool money from investors to build a portfolio of stocks from the consumer goods sector. The fund manager actively researches and selects companies with strong brand value, consistent sales, and robust distribution networks.
By concentrating investments in this single sector, these funds aim to capitalise on the non-cyclical nature of consumer demand. Their performance is closely tied to the growth and profitability of the FMCG industry.
Should I invest in FMCG Mutual Funds?
Investing in FMCG funds can be suitable if you are looking for a defensive addition to your portfolio. These funds tend to be less volatile than the broader market, making them a good choice for conservative equity investors.
However, since they are thematic funds, they carry concentration risk. They are ideal for investors who understand the FMCG sector and want to make a specific bet on its long-term, stable growth potential.
How to choose the best FMCG Mutual Fund for my portfolio?
When selecting an FMCG fund, look at its long-term performance (5+ years) across different market cycles. Check the fund’s expense ratio, as a lower ratio can improve your returns over time.
Also, review the fund’s portfolio to see the quality of companies it holds. A well-managed fund will invest in industry leaders with strong financials and a history of consistent performance.
What are the benefits of investing in an FMCG Mutual Fund?
1. Defensive Nature
FMCG products have constant demand, making the sector resilient during economic downturns. This defensive quality can provide stability to your investment portfolio when other sectors are volatile.
2. Consistent Demand
The demand for essential goods like soaps, food, and detergents doesn't change much with economic cycles. This leads to predictable revenue and earnings growth for FMCG companies, benefiting the fund.
3. Brand Power
These funds invest in companies with strong, established brands that command customer loyalty. This brand equity often translates into stable market share and pricing power, supporting long-term growth.
FMCG Funds vs. Other Thematic/Sectoral Funds
Unlike cyclical sectors like infrastructure or banking, the FMCG sector is defensive. Its performance is driven by consumer spending on essentials, not economic expansion. This makes FMCG funds less volatile compared to other thematic funds.
While technology or pharma funds may offer higher growth potential, they also come with higher risk and volatility. FMCG funds offer a balance of steady growth and lower risk, acting as a stabilising force in a diversified portfolio.
How much tax do I have to pay on FMCG Mutual Funds?
Since FMCG funds are a type of equity mutual fund, they follow equity taxation rules. If you sell your units after holding them for more than one year, you pay a long-term capital gains (LTCG) tax of 10% on gains over ₹1 lakh.
If you sell your units within one year, you pay a short-term capital gains (STCG) tax of 15% on the entire gain, irrespective of the amount.
How is the AUM of FMCG Mutual Funds Growing?
Investor interest in the defensive FMCG sector continues to grow. Over the past six months, the ICICI Prudential FMCG Fund Direct Plan Growth saw its Assets Under Management (AUM) increase by ₹298.33 crore.
This significant inflow reflects rising investor confidence in the stability and long-term potential of the FMCG sector, making it a leading category for AUM growth.
Stocks Added by Best FMCG Mutual Funds
In the last six months, fund managers in the FMCG category have been actively adding new stocks to their portfolios. AWL Agri Business Ltd. was a notable addition, being picked up by one of the funds in this space.
Other new additions include prominent names like Emami Ltd. and Bharti Airtel Ltd., indicating a strategy to diversify within and around the core consumer theme for potential growth.
Top Exits from FMCG Mutual Funds
Fund managers have also been trimming their positions in certain stocks. Over the last six months, Zydus Wellness Ltd. was completely sold off by one of the category's funds, suggesting a strategic shift away from the stock.
Similarly, Godfrey Phillips India Ltd. and VST Industries Ltd. were also exited by a fund, reflecting a re-evaluation of their future growth prospects within the portfolio.
FMCG Funds' Sector Allocation
While primarily focused on Consumer Defensive stocks, FMCG funds have recently diversified their portfolios. Over the last six months, there has been an increased allocation to sectors like Communication and Basic Materials.
This indicates a strategy by fund managers to capture growth opportunities in related areas. At the same time, allocation to the Consumer Cyclical sector has seen a slight decrease.
How is the AUM of Sector Fmcg Mutual Funds Growing?
In the past six months, the ICICI Prudential FMCG Fund Direct Plan Growth has emerged as the leader in AUM growth, witnessing an impressive addition of ₹298.33 crore. This positions it as one of the top-performing Sector Fmcg mutual funds in terms of investor interest and fund growth.
Fund | 6M change | |
|---|---|---|
 ICICI Prudential FMCG Fund Direct Growth Current AUM: 2.03K Cr | ₹298.33 Cr | Invest |
Stocks Added by Best Sector Fmcg Mutual Funds
Over the last six months, 1 Sector Fmcg Mutual Funds have added Cello World Ltd to their portfolio. This move highlights the stock’s growing appeal in the segment as a promising investment.
Top Exits from Sector Fmcg Mutual Funds
In contrast, Godfrey Phillips India Ltd has been exited by 1 of 1 Sector Fmcg Mutual Funds in the last six months. This shift underscores a cautious approach by fund managers toward the stock, reflecting changing market dynamics.
Sector Fmcg Funds’ Sector allocation
Over the last 6 months, Sector Fmcg category has seen increased allocation towards Communication, Basic Materials, Consumer Defensive sectors and allocation in Consumer Cyclical sectors has decreased
Sector | AUM |
|---|---|
 Consumer Defensive Increased by 16.70%, in last 6M | 1.91K Cr |
 Health Increased by 1.39%, in last 6M | 55.95 Cr |
 Communication Increased by 100.00%, in last 6M | 23.98 Cr |
 Consumer Cyclical Decreased by 8.36%, in last 6M | 22.2 Cr |
 Basic Materials Increased by 19.33%, in last 6M | 11.84 Cr |
Frequently Asked Questions
Are FMCG funds good for long-term investment?
Yes, FMCG funds are well-suited for long-term investment. The sector's stable demand and the presence of well-established companies can lead to steady wealth creation over time with lower volatility.
What kind of companies do FMCG funds invest in?
FMCG funds invest in companies that manufacture and sell everyday essentials. This includes major brands in food, beverages, personal care, and home care segments.
What makes FMCG funds a defensive choice?
Their defensive nature comes from the consistent demand for their products. People buy groceries and toiletries regardless of whether the economy is growing or in a recession, which provides stable revenues for these companies.
Do FMCG funds have any risks?
Yes. The main risk is concentration, as the fund's performance depends on a single sector. Other risks include increased competition, rising raw material costs, and changes in government regulations, which can impact company profits.
Can FMCG funds deliver consistent returns?
FMCG funds are known for delivering relatively consistent and stable returns compared to more cyclical sectors. However, they may underperform during strong bull markets when high-growth sectors take the lead.
How have FMCG funds performed in different market cycles?
Historically, FMCG funds have shown resilience during market downturns, falling less than the broader market. In bull markets, their performance might be more moderate compared to high-growth sectors.
How much of my portfolio should be in FMCG funds?
As thematic funds, it's advisable to limit your exposure. A 5-10% allocation to a specific theme like FMCG can be a reasonable part of a well-diversified equity portfolio.
Where can I invest in FMCG funds?
You can easily invest in FMCG funds through online platforms like INDmoney. You can compare different funds, check their performance, and start investing with a lump sum or SIP.
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