Union MF’s new Consumption Fund aims to tap into a strong structural growth story which now has tailwinds from Government policy measures aimed at spurring domestic demand.
Consumption accounts for over 60% of India’s GDP and comprises 19 diverse sectors.
Union’s framework for identifying opportunities within this broad theme rests on a 4 pillar approach RISE – R (reach), I (intermediaries), S (spend up – premiumization) and E (experiences).
Within RISE, Sanjay says “S” – spend up / premiumization is going to be the biggest growth theme in the years ahead. Expect the new portfolio to be sizeably allocated to stocks that play this theme.
Sanjay says a key differentiation of this fund is its fund strategy – there is much less focus on sectors, and lot more focus on consumer behaviour patterns to identify opportunities.
Today, premiumization is the biggest trend seen in consumer behaviour – tomorrow it could be a desire for newer experiences. Understanding consumers through the RISE framework is therefore a much better way of identifying investment opportunities over the conventional sectoral approach.
At present valuations, Sanjay is wary of allocating to hotels and real estate stocks. He is wary also of media & entertainment – a sector that’s facing bruising competition.