The Hindu Business Line : Diversified funds cut FMCG stocks

Kolkata June 11 Diversified funds' exposure to the FMCG sector, which was somewhat looking up till a couple of months ago, seems to be waning, recent indications suggest.

The few FMCG stocks that find their place in portfolios include some well-known names such as Asian Paints, Marico, P&G and Pidilite. ITC and Hindustan Lever, both large cap counters, are sought after by some funds.

Compelling Factors

Fund houses maintain that the sector, made up mostly by mid-cap stocks, has quite lost its attraction relative to others, some of which have lately come up in a big way. Also, within the FMCG space, retailing (like Pantaloon and Trent) and certain textile products (like Page Industries) are being considered more actively.

In the current circumstances, locating good investment opportunities in the FMCG segment is a major issue for funds. However, it is pointed out that there are compelling factors working in favour of the sector. Favourable demographics, reflected in adequate consumer demand, is particularly cited in this regard.

There are not too many FMCG-dedicated funds available, it may be mentioned. One of them, ICICI Prudential MF's sectoral product, which had Rs 82 crore in end-April, holds stocks such as ICI (which accounted for over 14 per cent of the net assets), Marico, Gillette and Pidilite. Consumer non-durables account for an overwhelming 75 per cent of its net assets.

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