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Aditya Birla Sun Life AMC Limited

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    Aditya Birla Sun Life AMC Limited

    A Deep Dive into Aditya Birla Sun Life India GenNext Fund Investing Landscape

    Jan 10, 2023
    4 min
    4 Rating

    India has become an attractive investing landscape as its GDP growth surpasses other major world economies. Behind India’s growth is its vast consumer base. In a typical year, domestic consumption contributes approximately 55% of the national GDP. And this consumption is expected to grow further, making the consumer market an attractive investment for the long term. India's consumer market is viewed as a $1 trillion investment opportunity, and tapping this opportunity is Aditya Birla Sun Life India GenNext Fund.

    In this article, we will study India’s investing landscape and how you can efficiently invest in this landscape.

    India’s Investing Landscape: Consumer Growth Story

    In 2022, India surpassed the United Kingdom to become the fifth-largest economy in the world. It is just the beginning. According to IMF’s World Economic Outlook, India’s GDP is expected to grow 6.1% in 2023, surpassing the 4.9% average GDP growth of emerging and developing economies.

    The growing working population is increasing per capita income, which in turn is driving demand for premium goods and services. The stats say the story:

    • The Rich Demographic- According to RBI data, India has the world’s youngest population, with an average age of population at 28.4 years. This youth dividend is likely to continue till 2045, putting India at an advantage over China, Brazil, USA, and Japan in terms of working-age population ratio.

    • Rising per capita income – As a higher percentage of the population is working, consumer income is rising, and so is their purchasing power. According to an article in The Economic Times , India’s average per capita income has surpassed $2,000. It is expected to exceed $12,000 by 2047, making India a higher-income country.

    • Increase in discretionary spending – The growing purchasing power of consumers is increasing discretionary spending. Moreover, growing e-commerce and digital transactions is giving consumers access to luxury goods and services, thereby fuelling premiumisation. In the January–June 2022 period, premium smartphone sales increased 83%, while the Indian smartphone market fell by 1%. Companies that served high-net-worth individuals are diversifying to include millennials.

    Growth Trends in Domestic Consumption

    Several industries could benefit from the growing purchasing power of the youth.

    • The automotive industry could benefit from the electric vehicle (EV) revolution.

    • The retail industry could undergo a significant shift to organized retail.

    • Digitization - The availability of cheaper internet and increasing mobile penetration could drive digitization.

    • Travel and tourism - The younger population is spending on experience, driving demand in air travel, top-tier hotels and resorts.

    Apart from above sectors, real estate, home-related products, and the FMCG personal care are also seeing growing demand. And facilitating this consumption is financial services (lending and non-lending).

    How Aditya Birla Sun Life India GenNnext Fund is tapping India's consumer growth story

    The Aditya Birla Sun Life India GenNext Fund seeks to tap India's consumer growth story fuelled by high disposable income of the young generation (Generation Next). The fund seeks to invest in multiple consumer-driven sectors, like financial services, consumer discretionary, consumer goods, utilities, automotive, retail, travel and tourism, housing finance, and more.

    The GenNext Fund selects business-to-consumer (B2C) companies with distinct brand identities that caters to young consumers. It then filters the shortlisted companies by revenue and cash flow. It selects companies that earn at least 50% of revenue from goods and services consumed directly by end consumers.

    Using this approach, the Aditya Birla Sun Life India GenNext Fund aims to deliver long-term capital appreciation. The fund manager uses his expertise to maintain 40-60 stocks in the fund at any given time to avoid over-diversification.

    How can you benefit from a consumer growth story?

    The Aditya Birla Sun Life India GenNext Fund is a theme-based open-ended fund and is ideal for aggressive investors seeking wealth creation in the long term. You can benefit from India’s consumer growth story by investing in the fund through a systematic investment plan (SIP). The fund will give you exposure to a portfolio of well-diversified stocks and the expertise of a fund manager.

    The trend of discretionary consumption by the youth dividend has created an opportunity for investors to earn from the future spending of consumers in India.

    Aditya Birla Sun Life India GenNext Fund

    (An open ended equity scheme following Consumption theme)

    This product is specially designed for investors seeking

    • Long term capital growth
    • investments in equity and equity related securities of companies that are expected to benefit from the rising consumption patterns in India fuelled by high disposable incomes

    *Investors should consult their financial advisers if in doubt whether the product is suitable for them

    Reference Links

    https://www.cnbctv18.com/personal-finance/consumption-mutual-funds-offer-more-than-25-returns-in-one-year-should-you-invest-14614291.htm

    https://economictimes.indiatimes.com/news/economy/indicators/view-indias-consumer-market-a-1-trillion-investment-opportunity/articleshow/94157242.cms?from=mdr

    https://www.youtube.com/watch?v=XCGEJpHRfQk

    https://www.facebook.com/watch/live/?ref=watch_permalink&v=5077411118977727

    The sector(s) mentioned herein do not constitute any research report/recommendation of the same and the Fund may or may not have any future position in these sector(s)

    Mutual Fund investments are subject to market risks, read all scheme related documents carefully.