What is Consumption theme and why every mutual fund talks about Consumption? How it is beneficial to us ?

Hi,

A very warm welcome to you all.

We often read in newspapers and magazine that consumption is increasing and how this increase can help in growing our economy.

We have seen lots of mutual funds coming around and they call themselves consumption funds.

Reliance, SBI, ICICI, BNP Paribas almost all the mutual funds are going on consumption theme.

Lets try to understand what exactly consumption is ??

As the name suggests, consumption means consuming, i.e. whatever we are using right from the time we wake up till we fall asleep.

E.g. We use FMCG products ( soaps, biscuits etc.), we use mobile phones, laptops, cars, Dish TV's etc. , so you can just imaging the number of things we use daily which are integral to our lives and we can not go without them.
So, ultimately we are consuming them for sustainability.

But why almost every mutual fund is selling consumption fund ?

The reason is simple as our consumption has been increased from our previous generations and the trend will continue.
It is often said that Next Generation will always Lead a Better Life ?

So , practically this statement means that the present generation will consume more than the previous generation and the upcoming generation will consume more than the present generation.

We take a very simple example to understand this.

Mobile Phones. A revolution which has changed lives of billions across the globe. If we go back into the history , we would see there were landlines which would not even be there in each and every household. Time changed and we saw people moving to mobile phones and landline became obsolete.
There was a time when we had only one mobile phone at our house but now a- days each one of us in our family, even our maids, drivers own mobile phones.

What does it means ?
A transition and increase in consumption of a  landline which was barely available and now a mobile phone , a simple version which is accessible to all family members.
Imagine one landline for 10 people to 10 mobile phones or more for 10 people.

Same goes with laptops, TV's, cars and so many things we eat, we consume etc. So, understanding this fact implies that whenever consumption increases, it also increases growth in economy as all the earnings coming from these companies will add up in the earning of companies in India. Thereby, lifting sensex and nifty.