October 7, 2025
admin
In the current market scenario, the hype around consumption related stocks is much higher. Amidst this, Invesco Mutual Fund has launched the Invesco Consumption Fund NFO. We spoke to Mr. Manish Poddar, Fund Manager, Invesco Mutual Fund to get his views on the strategy and outlook for the Fund.
- Benchmark Beating Strategy
The Nifty India Consumption Index already covers top 30 companies across FMCG, autos, telecom, healthcare, etc. How does Invesco plan to generate alpha and beat the benchmark, given its concentrated and mature nature?
Weight Allocation Across Subsegments
Within the index, FMCG and Telecom dominate. Will your strategy give equal weightage across subsegments, or will you take an overweight/underweight approach based on valuations and growth triggers?
Whenever we Analyze a company, we have a five-step process of 1. Identifying a trend (TAM), 2. Analyzing promoter mindset (in terms of capital deployment and people deployment), 3. Analyzing unit economics and does the company have the balance sheet to capitalize on the trend, 4. understanding capabilities of company to either manufacture at lower cost (back end) and/or service the consumer efficiently (front end) and then finally compare valuations of different companies against their opportunity set. Invesco India Consumption Fund will not have any sub segment/market cap bias as we are primarily investing in 25-30 companies which we have selected bottom up using our process/framework and we will have active allocations compared to the benchmark (resulting in either being underweight/overweight a company/sub segment of the index).
- Valuation Concerns
The index currently trades at a high P/E of 41+. How do you plan to justify entry valuations and manage downside risk if there’s a correction in consumer-facing stocks?
We were not witnessing broad-based consumer growth in the listed universe in the last 2 years, so stock selection was key. However, given the measures already announced (income tax cut benefit of ~Rs100,000cr, GST reform benefit of ~Rs1,75,000cr and interest rate cut benefit of ~Rs45,000cr in CY25) and measures in the reckoning (8th pay commission benefit of ~Rs350,000cr and further interest rate cut given outlook on inflation), we could see revival in overall consumption growth. So, valuation needs to be looked at in the overall context of growth expectations. Given our framework we are able to select companies with longer growth runway at fair valuations, alongside the portfolio approach with proper allocation helps us to cover for any material downside risk of a business in terms of either execution and/or any external variables.
- Consumption Theme Outlook
Beyond staples and autos, new-age consumption drivers like aviation, quick service restaurants, e-commerce, and premium lifestyle brands are emerging. How will the fund capture such structural shifts in Indian consumption to differentiate from a passive index fund?
A consumer company operating in India needs to understand the 4C’s of Country, Consumer, Channel and Competition, and needs to be relevant with the changing consumer landscape. Invesco India Consumption Fund will invest in companies which can operate in such a complex marketplace. The fund is a play on consumer wallet share movement across categories, namely value retail, quick commerce, quality healthcare, leisure travel, etc; for instance, there is a trend of consumers spending more time on devices (be it mobile phones, laptop, TV), the fund could invest in companies which play on such changing consumer trends.
*TAM – Total Addressable Market
Source – Internal
Note: The above product labelling assigned during the New Fund Offer (NFO) is based on internal assessment of the Scheme characteristics or model portfolio and the same may vary post NFO when the actual investments are made.
Disclaimer – The views are expressed by Manish Poddar at Invesco Asset Management (India) Private Limited. The write up is for informational purposes only and should not be construed as an investment advice or recommendation to any party or solicitation to buy, sell or hold any security or to adopt any investment strategy. It should not be construed as investment advice to any party. The views and opinions are rendered as of the date and may change without notice. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on the prevailing market conditions / various other factors and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. The data used in this document is obtained by Invesco Asset Management (India) Private Limited (IAMI) from the sources that it considers reliable. While utmost care has been exercised while preparing this document, IAMI does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The readers should exercise due caution and/or seek appropriate professional advice before making any decision or entering any financial obligation based on information, statement or opinion which is expressed herein.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.