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    Build a Strong Portfolio with Consumption Funds

    Consumption Fund Investment Strategies: How to Build a Strong Portfolio?

    Last Updated On 11-11-2024

    By investing in a consumption fund, you can continue to thrive based on the increasing consumer spending and companies’ profitability and growth. But it’s not that simple! Just like any other long-term investment plans , you need to think and invest carefully to craft a strong portfolio. In addition to choosing the best consumption fund, you need to work on many other vital investment-related aspects to maximise your returns.

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    Read on to learn some effective consumption fund investment strategies.

    What is a Consumption Fund?

    A consumption fund is a type of thematic fund that primarily invests in companies benefiting from consumer spending. These businesses typically cater to sectors driven by consumer demand- technology, retail, healthcare, and FMCG. Therefore, by focusing on consumer-driven businesses, the best consumption fund allows investors to capitalise on consumers’ spending on daily-use products and services regardless of broader economic conditions.

    Strategies to Invest in a Consumption Fund to Build a Strong Portfolio

    Choosing an appropriate consumption fund that fits your financial goals, risk tolerance, and investing time horizon is a critical step in creating a solid investment portfolio. Thinking about how to invest in new fund ?

    The below outlined are some practical methods for investing in consumption funds, aiding you in creating a strong portfolio:

    • Set Your Financial Goals

      The first thing you need to start with when considering investing in consumption funds is to set clear financial goals.
      Ask yourself whether you desire to build a college fund, buy a home, or save for retirement. Defining these objectives will help you guide through your investment choices and choose the consumption fund that best suits your needs.
      For example, a consumption fund focusing on necessities might be a better choice if you're hoping for modest, consistent growth in your returns.
    • Assess Your Risk Tolerance

      How much risk investors can take and how long varies from person to person. Are you comfortable with higher risk, and can you invest aggressively? If yes, it’s advisable to look for consumption funds that include a mix of essential and discretionary sectors, like tech or luxury goods. Investing in such consumption funds can yield higher returns, but remember that their value fluctuates more.
      If you are more of a conservative investor, focus on funds that include essential goods as they are demanded, no matter whether there is a boom or recession in the economy.
    • Determine Your Investment Time Horizon

      Your investment timeline refers to how long you plan to hold your investments in the consumption fund before needing to access them.
      Try to opt for a longer time horizon as it allows for a more aggressive investment approach with consumption funds investment enabling you to recover from short-term dips. On the other hand, if your time horizon is shorter, you might have to invest conservatively in low-volatile consumption funds that provide moderate growth and return potential.
    • Choose the Ideal Consumption Fund

      Now that you have determined your financial goals, risk tolerance, and investment time horizon, it’s time to select the best new fund to invest now. The industries and businesses you invest in will depend on the chosen PNB MetLife Bharat Consumption Fund .
      Research the potential fund’s composition to understand the industries it emphasises. Does it include a broad range of essential and non-essential consumer companies, or is it more sector-focused? You shouldn't go with any fund until you examine the fund's past performance and the manager's experience and track record.
    • Balance Investment Risks and Returns with Portfolio Management

      Investing in consumption funds can be a little risky, particularly if you're making long-term investments. Although it’s not possible to entirely mitigate the potential investment risks, you can reduce them with effective portfolio management .
      Actively managing your portfolio by adjusting investments based on market trends can help maximise your gains while minimising the risks. You can also seek the guidance of a professional fund manager to keep an eye on your investments and make informed investment or portfolio adjustment decisions.
    • Reinvest Dividends for Compounded Growth

      Another efficient strategy to boost the growth of your portfolio is reinvesting dividends you receive by investing in the equities of companies within consumption-driven industries. Now, you no longer need to make additional investments.
      With the dividend reinvestment options provided by many consumption funds, you can gradually purchase more fund units, resulting in compound growth. This strategy works well in a consumption fund because of the steady performance of consumer-focused companies. By reinvesting dividends, you enhance your stake in these funds, increasing the overall potential returns of your investment portfolio.
    • Diversify Within the Consumption Fund

      Since consumption funds are sectoral funds, you may wonder how they can be diversified. Well, these funds encompass a range of consumption-driven industries, such as healthcare, automobile, retail, consumer durables, and more.
      By investing in consumption funds, investing in varied companies and industries can help you gain exposure to multiple areas within the consumer sector, lowering your overall risk.

    Wrapping up it all!

    Investing in the consumption fund provides a promising way to build a solid and balanced investment portfolio. But to make the most of your fund investment, you need to deploy effective investment strategies.

    Want to learn what is new fund? Looking for suitable consumption funds to invest in to craft a strong portfolio? Explore PNB MetLife consumption funds .

    Frequently Asked Questions

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    What sectors do consumption funds help invest in?

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    Consumption funds investment can help invest in the equities of sectors that are driven by direct or indirect consumer spending, like healthcare, retail, technology, consumer durables, automobiles, manufacturing, infrastructure, and more.

    Are consumption funds a good option for long-term investments?

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    Consumption funds focus on steadily growing industries based on consumer needs and spending patterns. Hence, you can earn more by investing for long periods.

    Why choose PNB MetLife Consumption Fund for an investment portfolio?

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    The PNB MetLife consumption fund can provide investors diverse sectoral exposure within the consumer-driven market, enabling them to craft a balanced portfolio and capitalise on sustainable growth aligned with evolving consumption trends.

    Disclaimer:

    The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.

    PNB MetLife India Insurance Company Limited
    Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka
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    Call us Toll-free at 1-800-425-6969, Phone: 080-66006969, Website: www.pnbmetlife.com, Email: indiaservice@pnbmetlife.co.in or Write to us: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai – 400062, Maharashtra. Phone: +91-22-41790000, Fax: +91-22-41790203.

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