The second wave of COVID-19 merely created a pause in India’s consumption story. The experts say economic recovery and demand in consumption are likely to improve further as many states have lifted the lockdown restrictions and vaccination drive is going at a better pace.
Improvement in economic activities exhibit that this growth will benefit the consumption-oriented sectors to an extent. It is estimated that there will be a higher commercial and industrial demand soon to uplift India’s consumption. The economic, demographic, and digital improvements are likely to boost the consumer goods space.
Axis Mutual Fund is of the view that investors can generate wealth by investing in consumption-oriented companies amid the economic revival. The fund house has launched Axis Consumption ETF. It is an open-ended exchange traded fund tracking NIFTY India Consumption Index.
On the launch of the NFO, Chandresh Nigam, MD & CEO, Axis AMC, said, “We aim to provide our consumers with an investment option that has proof of growth and strong returns. The consumption market has remained strong, gained traction and grown consistently over the last few decades. I believe Axis Consumption ETF is a good opportunity for investors to gain exposure as well as a steady and continued long-term growth in the market.”
Table 1: Details of Axis Consumption ETF
| Type | An Open Ended Exchange Traded Fund tracking NIFTY India Consumption Index. | Category | Exchange Traded Fund |
| Investment Objective | To provide returns before expenses that closely correspond to the total returns of the NIFTY India Consumption Index subject to tracking errors. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved. | ||
| Min. Investment | Rs 5,000 and in multiples of Re 1 thereafter. | Face Value | Rs 10/- per unit |
| Entry Load | Not Applicable | Exit Load | Nil |
| Fund Manager | – Mr Viresh Joshi – Mr Deepak Agarwal |
Benchmark Index | Nifty India Consumption TRI Index |
| Issue Opens | August 30, 2021 | Issue Closes | September 13, 2021 |
(Source: Scheme Information Document)
The investment strategy for Axis Consumption ETF will be as follows:
Axis Consumption ETF will predominantly invest in stocks comprising of the underlying index in the same proportion as in the index and endeavour to track the benchmark index.
The scheme will follow a passive investment strategy to achieve its investment objective by investing in a basket of stocks under Nifty India Consumption Index that offers exposure to the consumption theme.
The endeavour is to invest in leading companies across sectors under the consumption theme and track the performance of the underlying index, and maintain a low tracking error by closely aligning the portfolio with the index.
About the benchmark
The NIFTY India Consumption Index is designed to reflect the behavior and performance of a diversified portfolio of companies representing the domestic consumption sector, which includes sectors like Consumer Non-durables, Healthcare, Auto, Telecom Services, Pharmaceuticals, Hotels, Media & Entertainment, etc.
The NIFTY India Consumption Index comprises of 30 companies listed on the National Stock Exchange (NSE).
The following is a list of constituents under the index by their weightage as of now:
(Source: Scheme Information Document)
Under normal circumstances, the asset allocation will be as under:
Table 2: Asset Allocation of Axis Consumption ETF
| Instruments | Indicative Allocation (% of net assets) | Risk Profile | |
| Minimum | Maximum | High/Medium/Low | |
| Equity instruments covered by Nifty India Consumption Index | 95 | 100 | High |
| Debt & Money Market Instruments | 0 | 5 | Low to Medium |
(Source: Scheme Information Document)
Who will manage Axis Consumption ETF?
Mr Viresh Joshi and Mr Deepak Agarwal will be the dedicated fund managers for this scheme.
Mr Viresh Joshi is Assistant Vice President – Chief Trader Equities at Axis Asset Management Company Ltd. He is a B.com graduate and has over 23 years of experience in the financial services industry. Prior to this, he was associated with BNP Paribas Securities India Pvt. Ltd. as Associate DirectorEquities, ICICI Securities Ltd. as Institutional – Sr. Sales Trader – Equity Derivatives, MF Global Sify Securities (I) Pvt. Ltd. (earlier RefcoSify Securities India Pvt. Ltd.) as Institutional – Associate Sales Trader – Equity Derivatives, and Santoor Leafin Pvt. Ltd. as Sales Trader – Equity Derivatives.
The other schemes Mr Joshi manages are Axis Arbitrage Fund (along with Mr. Devang Shah), Axis Nifty ETF (along with Mr. Ashish Naik), and Axis Banking ETF (along with Mr. Ashish Naik).
Mr Deepak Agarwal is Assistant Fund Manager – Equity at Axis Asset Management Company Ltd. He is a Chartered Accountant (C.A.) and B.com graduate and has over 17 years of experience in financial services. Prior to this, he has worked with Axis Asset Management Company Ltd. as Research Analyst – Equity, Tata Asset Management Ltd. as Equity Research Analyst, Axis Capital Ltd. as Equity Research Analyst, Indiabulls Securities Ltd. as – Equity Research Analyst, Vmax Financial Services Ltd. as Equity Research Analyst, BRICS Securities Ltd. as Equity Research Analyst, and Sureprep India Pvt. Ltd. as Review Manager.
The other schemes managed by Mr Deepak are Axis Banking ETF (along with Viresh Joshi) and Axis Quant Fund (along with Mr. Hitesh Das).
Fund Outlook – Axis Consumption ETF
Axis Consumption ETF is a low-cost passive investment solution investing in a basket of 30 consumption-oriented companies from sectors such as, consumer non-durables, media & entertainment, etc.
The scheme offers investors a bite-size access to the biggest consumption names in India, by passively investing in stocks comprising the Nifty India Consumption Index. With the Indian economy on the path of recovery, a key beneficiary in this growth is the consumption sector.
Being a sectoral ETF, this scheme limits the fund manager’s interference and eliminates the risk of stock selection. The scheme endeavours to benefit from the Indian consumption sector because it provides a huge opportunity to generate optimal returns.
However, events like the constituent stocks becoming illiquid in cash market, the exchange changing the constituents, a large dividend going ex but lag in its receipts, etc tend to increase the tracking error. In addition, if the sector goes out of favour, your investments may turn sour due to the concentrated nature of the portfolio.
This scheme is suitable for investors seeking to benefit from the consumption sector, have high-risk appetite and a long investment horizon. Ensure your investment objectives are aligned with the fund.
This article first appeared on PersonalFN here
