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Best Thematic Consumption Mutual Funds – India’s Top Performing Thematic Consumption Mutual Funds to Invest in 2023

Updated on :  

08 min read.

Best Thematic consumption mutual funds are a class of thematic funds that invest in equities of companies that are driven by the consumption behavior in India. We have covered the following in this article on the best thematic consumption mutual funds:

Introduction to Best Thematic Consumption Mutual Funds

Thematic consumption funds are a class of thematic funds that invest in consumer-facing companies. The performance of these funds is driven by consumer behaviour in the country. Investing in these funds is apt for those investors that are looking to benefit from the success of consumer-facing companies during the bull run.

Top Thematic Consumption Mutual Funds

The following table shows the top-performing thematic mutual funds:

Fund 3-Year Returns 5-Year Returns Link
Canara Robeco Consumer Trends Fund – Regular Plan – Growth 9.70% 13.63% Invest now
Aditya Birla Sun Life India GenNext Fund Growth 7.39% 12.96% Invest now
Mirae Asset Great Consumer – Regular Growth 5.91% 11.94% Invest now
SBI Consumption Opportunities Fund Regular Plan Growth 0.21% 8.61% Invest now
Nippon India Consumption Fund – Growth 4.37% 6.72% Invest now

Who Should Invest in Thematic Consumption Mutual Funds?

Since thematic consumption funds concentrate their portfolio towards a particular, which is consumer-facing companies, they carry a high risk of concentration. Therefore, these funds are apt for aggressive investors who don’t mind assuming higher levels of risk. These funds are expected to do well when the consumption is high, and the economy is doing well.

Taxability of Thematic Consumption Mutual Funds

The pidends offered by mutual funds are added to your overall income and taxed at the income tax slab rate you fall under. This way of taxing pidends is referred to as the classical way of taxing pidends. It was introduced in the Budget 2020. Until then, the pidends were made tax-free in the hands of investors as the fund houses paid pidends distribution tax (DDT).

Short-term capital gains are taxed at a flat rate of 15%, regardless of your income tax slab rate. Long-term capital gains of up to Rs 1 lakh a year are made tax-exempt. Any gains above this limit are taxed at 10%, and there is no benefit of indexation provided for investors.

Risks Associated With Thematic Consumption Funds

Since thematic consumption funds are a class of thematic mutual funds, they carry a high risk of concentration as their portfolio is concentrated towards equities of consumer-facing companies. There is no doubt that you are going to benefit from these funds when the underlying sector is doing well. But, it is also important to note that your losses can be magnified when the sector is not performing as expected.

Apart from that, thematic consumption funds also carry volatility risk and market risk. Volatile risk is the possibility of a drop in your investment’s worth due to a sudden change in the price of the underlying securities. Market risk is the possibility of the value of your investments dropping due to adverse market developments.

Things to Consider Before Investing in Thematic Consumption Funds

You have to consider the following factors before deciding to invest in a sectoral infrastructure fund:

  • Risk profile
    If you are a conservative investor, then you may not consider investing in sectoral infrastructure funds as they come attached with higher levels of concentration risk. Therefore, you need to be ready to bear the levels of risk these funds come associated with.
  • Investment horizon
    Investors must have an investment horizon of longer than five years to mitigate the associated risks to a greater extent.
  • persification
    You must be aware of the fact that you don’t get the benefit of a persified portfolio by investing in these funds as they concentrate their portfolio with equities of companies operating in the infrastructure sector.

Advantage of Investing in Thematic Consumption Funds

Investing in sectoral infrastructure funds comes with the following advantages:

  • You get exposure to a portfolio constituted by top-performing equities of infrastructure companies.
  • You get the potential to earn benchmark-beating returns in the long run.
  • These funds are an excellent option to achieve long-term financial goals.