Tata India Consumer Fund: Is It a Valuable Investment in 2024

Insights to Tata India Consumer Fund

The Tata India Consumer Fund is a thematic mutual fund, launched on December 28, 2015, that primarily invests in companies benefiting from India’s rising consumption trends. Moreover, currently, it is managing an AUM of Rs.2371 Crores while giving quite an impressive CAGR (Compounded Annual Growth Rate) of 19.58%.

As an open-ended equity scheme, its main objective is to offer long-term capital growth by focusing on equity and equity-related investments in businesses engaged in consumer-driven activities.

Thanks to its focused approach and strong performance, this fund is an attractive choice for both beginner and seasoned investors. Through this post, you will see how this fund could be a valuable addition to your portfolio. Likewise, you will get to know if it’s the right time to include this stock in your portfolio or not.

Key Aspects of the Tata India Consumer Fund

Here are some key features that describe this category well which ultimately makes it a great choice for a portfolio:

Investment Objective

The fund primarily aims to generate long-term capital appreciation by allocating at least 80% of its net assets to equities of companies in the consumption sector. This includes industries like consumer goods, retail, and various services sectors, all closely tied to India’s growing consumption demand.

Performance Overview

The fund has delivered solid returns across various timeframes:

• 1-Year Return:Approximately 45.51%
• 3-Year Return: Approximately 22.63%
• 5-Year Return:Approximately 18.76%
• Since Launch:Approximately 19.12%

These returns underscore the fund’s consistent ability to outperform its benchmark, the NIFTY India Consumption Total Return Index, positioning it as a strong option for investors seeking long-term growth.

Time to Talk about the Fund Manager

Mr. Sonam Udasi (Equity Manager)

Mr. Sonam H. Udasi is a reputed fund manager at Tata Mutual Fund with more than twenty-one years in equity research and investment management. He has a Bachelor of Commerce degree as well as a Post Graduate Diploma in Management which has a specialization in the field of Finance.

Since his appointment in Tata Asset Management in the year 2014, he has been actively involved in the management of certain equity funds such as the Tata India Consumer Fund. Some of his previous employers are ASK Raymond James, JM Financial Asset Management Company, Prime Stock & Securities Limited, BRICS Securities Limited, and IDBI Capital Market Services Limited in which he sharpened his skills in research and investment.

Dealing in consumer products and service-oriented stocks, its extensive market awareness enables Udasi to locate profitable opportunities. He has a long-only investment approach with an objective of capital appreciation based on the demographic dividend of India especially the expanding middle-income group and rising consumption.

Sonam Udasi has been a key leader for Tata India Consumer Fund and has transformed it into a fund that would attract investors interested in the emerging Indian consumer market.

Why Invest in Tata India Consumer Fund for 2024 Portfolio?

The following are some strong reasons to set your mind towards having this fund in your portfolio:

1. Leveraging Consumption Growth:As India’s economy grows and consumer spending rises, investing in this fund enables exposure to sectors that are set to benefit from increasing demand. Factors such as a burgeoning middle class and rising disposable incomes are driving this growth in consumption.
2. Impressive Track Record: The fund’s consistent outperformance against its benchmark and peers positions it as a reliable choice for those aiming to earn higher returns. Its strong performance over the years demonstrates the fund’s ability to capture opportunities in growing markets, even amid market fluctuations.
3. Diversified Portfolio: By spreading investments across various companies and sectors within the consumer space, the fund effectively reduces risk while enhancing portfolio stability.
4. Expert Management: skilled professionals with deep insights into both market dynamics and the consumer sector manage the Tata India Consumer Fund. Their expertise helps navigate market uncertainties and capitalize on promising opportunities.
5. Long-Term Growth Potential: Designed for long-term investors, the fund offers opportunities to benefit from sustained growth in India’s consumption sector over an extended period.
6. Alignment with Economic Growth:India’s expanding economy, rising incomes, and increasing consumer spending present a favorable backdrop for this fund. Its focus on consumption-related sectors allows investors to benefit from these macroeconomic trends.

Factors to Consider Before Investing in Tata India Consumer Fund

Here are some points to note before adding this stock to your portfolio:

1. Expense Ratio:The Tata India Consumer Fund offers a competitive expense ratio of 0.80% for its direct plan, lower than the category average of 0.92%. This keeps more of the fund’s returns in your pocket, increasing overall profitability.
2. Fund Size:As of March 31, 2024, the fund’s Assets Under Management (AUM) stood at ₹1,895.39 crore, signaling strong investor confidence and broad appeal.
3. Minimum Investment:Investors can get started with a lump sum of ₹5,000, while SIP (Systematic Investment Plan) contributions can begin from as low as ₹100, making the fund accessible to a wide range of investors.
4. Exit Load: The fund applies a 0.25% exit load for redemptions made within 30 days, encouraging a longer-term holding strategy while discouraging short-term trading.

Key Considerations for Investors of Consumption Mutual Funds

Investors should take these necessary precautions:

1. Market Risks:Like all equity-based investments, the Tata India Consumer Fund is exposed to market risks. Investors should be prepared for price fluctuations, especially during periods of market volatility.
2. Suitable for Long-Term Investments:This fund is most appropriate for long-term investors who can weather the ups and downs of market cycles, allowing their investments time to grow.
3. Tax Considerations:Profits from the fund are subject to capital gains tax. If units are redeemed within one year, short-term gains are taxed at 15%. For long-term capital gains, amounts exceeding ₹1 lakh in a financial year are taxed at 10%.

Final Note

The Tata India Consumer Mutual Fund is a compelling option for investors who want to tap into India’s growing consumption market while seeking long-term capital growth. Investors can start a SIP to keep a balanced portfolio and build long-term gains through its compounding formula.

With its strong historical performance, professional management, and sector diversification, the fund is well-suited to those looking to align their investments with India’s broader economic expansion.

Whether you’re a new investor or a seasoned one, adding this fund to your portfolio can help you achieve your financial goals effectively while benefiting from the country’s robust consumption growth.