The Hindu Business Line : FMCG funds back in favour as scrips make gains

AFTER lying in the backwaters for years, FMCG funds are fast staging a comeback. Returns generated by these funds in the last one year have beaten those clocked by other categories of equity funds, sectoral or otherwise - all except those dedicated to the banking industry.

FMCG funds, which occupied the fifth slot in the three-year league tables, have provided an average 48.75 per cent to investors for the one-year period ending March 16, a deed that has propelled them to the No. 2 position.

Fund circles attribute the ascent partly to positive developments taking place in the FMCG sector, especially to sharp north-bound movements in such FMCG counters like ITC and Gillette.

Incidentally, what makes the banking funds the leader is their average - 62.3 per cent on a one-year basis.

MF sources point out that in terms of three-year returns, the FMCG players (with a mean score of 25.46 per cent) were nowhere in the reckoning, not with those in the ELSS, diversified, petro and pharma categories occupying the top positions in that order.

The count improved to 53.56 per cent on a two-year basis; however, funds in the ELSS, diversified and pharma categories still led the pack. The situation has become different since then, sources said.

The enhanced numbers notwithstanding, FMCG may not be a big hit with investors, distributors maintain, adding that these funds have been away from the limelight for far too long. "Investors have not looked at them seriously at all. I do not think the market's perception (of FMCG) will change in a hurry," a source with a national-level distributor said.

The CNX FMCG Index offered by NSE - this is a 15-share index representing 90 per cent of the market cap and turnover of FMCG stocks - includes well-known names such as HLL, Britannia, Colgate-Palmolive, Dabur, Tata Tea and Pantaloon.

Many of these stocks have been moving up on the bourses, which have led to the overall increase. ITC, for instance, has snaked up from Rs 815 or so to more than Rs 1,300 at the moment over the past one year.

Trent has gained from roughly Rs 180 to Rs 580, while Tata Tea has risen from 250 to Rs 520 or so during this period. There are other examples.

The top performing scheme, Prudential ICICI FMCG, has given 66.82 per cent in the past year (as on March 16), compared to 43.94 per cent and 35.49 per cent provided by SBI Magnum FMCG and Franklin FMCG respectively. Pru ICICI's portfolio statement as on February 28 indicates that the fund manager concerned has invested in counters such as ITC, Dabur, Goodlass Nerolac, Gillette and Trent.

ITC, in fact, is the top holding, accounting for about 13 per cent of the assets.

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