MO-AMC has launched its Consumption Fund with a focused, high alpha potential fund strategy to harness the huge growth potential of the Indian consumption story as it starts accelerating with growing per capita income.
The proverbial J curve is kicking in for several discretionary consumption oriented businesses as India’s per capital income crosses $3000 and heads higher in the coming years. MO-AMC believes market hasn’t priced in this coming acceleration yet.
The fund will be sharply differentiated from peers with its high alpha strategy that involves:
1. Focus only on discretionary consumption – which is where growth is the strongest. Don’t expect a portfolio diversified across staples as well, which is what most consumption funds do.
2. Focused portfolio of only 25 high conviction bets with meaningful allocations (vs 50+in most peers)
3. High active share of around 85% (vs 40-50% in peers)
4. Sizeable allocations to mid and small cap stocks as some of the best discretionary consumption ideas are in these spaces (vs large cap tilted portfolios of most peers).
MO has had considerable success with investing in the discretionary consumption theme across most of its broader mandate portfolios. It aims to leverage this depth of understanding of this space with a focused fund that invests solely in this theme.