NFO Pick – (LIC MF Consumption Fund)

3 Nov 2025 , 09:55 AM

WHY A CONSUMPTION FUND AT THIS JUNCTURE?

There are some compelling reasons to invest in a consumption fund. Here are some strong reasons for the same.

• Indian consumption patterns are undergoing a change. From premiumization of demand to greater focus on brands and the organized segment; consumption has changed. This has been supported a greater propensity for digital transactions to meet consumption.
• While the share of food and other essentials in the consumption basket is falling in India; it is the discretionary consumption that is growing rapidly. This is driven by changing demographics in favour of young India and rising income and wealth effect.
• India’s per capital income at around $2,600 per annum is at the same level that China was in 2008. That was the period when consumption in China exploded along with rising income levels and favourable demographics. India could see a similar phenomenon.
• Consumption opportunities are fairly well spread out sectorally. They include opportunity baskets like FMCG, consumer durables, automobiles, healthcare, power, delivery of consumer services, telecom and aviation services.
• Not only has the Nifty Consumption outperformed the Nifty 50 and the Nifty 500, more often in the last 15 years, but the CAGR growth is also higher. Also, the limited overlap with broader indices, makes consumption a good diversification bet.

Let us now turn to the investor categories for whom the LIC MF Consumption Fund will be a good fit.

INVESTORS BEST SUITED TO INVEST IN LIC MF CONSUMPTION FUND

Here are the investor categories who should be looking to invest in the LIC MF Consumption Fund.

• Investors looking to ride any or all of the 6 key themes underlying consumption. These include Urbanization, Premiumization, Lifestyle Changes, Income Surge, Formalization of supply, and Greater Digitization of service and product delivery.
• Investors looking to diversify their core portfolio can also look at the LIC MF Consumption Fund as the overlap with generic indices is quite low.
• Investors looking to capitalize on the overriding consumption theme in India and who are looking at proxies for riding the India consumption theme.
• This is best suited to investors who have a relatively high risk-appetite and have the ability and the willingness to wait for a longer time frame of over 7-8 years to get the best results of the consumption theme.

Let us now turn to the kind of returns that consumption funds have generated over the last few years.

HOW CONSUMPTION FUNDS HAVE PERFORMED IN INDIA?

Since LIC MF Consumption Fund is an active fund, we have compared it only with other active consumption funds in India. The basic premise is 5 years of existence to be considered in the rankings. There are 20 Consumption Funds in India, managing total AUM of ₹40,688 Crore. Of these, only 11 funds have a 5-year track record. Here are the Top-10 Consumption Funds in India based on 5-year returns. These returns pertain to Direct Plans.

Consumption Funds Scheme Name	Return (%) 1-Year	Return (%) 3-Years	Return (%) 5-Years	Daily AUM (₹ in Crore)
SBI Consumption Opportunities Fund	-2.44	15.83	26.09	3,274.40
Nippon India Consumption Fund	4.95	17.49	25.50	2,823.65
Mirae Asset Great Consumer Fund	5.15	19.27	23.99	4,798.67
Canara Robeco Consumer Trends Fund	4.48	17.70	22.73	2,016.30
ICICI Prudential Bharat Consumption Fund	4.47	18.46	22.71	3,291.42
Tata India Consumer Fund	5.17	20.27	22.63	2,673.41
Mahindra Manulife Consumption Fund	4.33	18.07	22.18	567.48
Aditya Birla Sun Life Consumption Fund	5.36	16.40	22.05	6,578.61
Baroda BNP Paribas Consumption Fund	3.64	17.61	21.95	1,561.73
Sundaram Consumption Fund	5.72	17.80	21.22	1,652.28
Data Source: AMFI

 

The table above captures the best performing Consumption Funds in India in terms of 5-year CAGR returns. If we look at 1-year returns, the average returns are at 3.93%, with fairly high dispersion in returns. Over a 3-year period, the average returns of consumption funds stand at 17.66%, which shows a much lower level of dispersion in returns. Consumption funds have given impressive returns over 5-years at 22.72% CAGR, although this may have been influenced by the COVID base. Even the dispersion is fairly low over a 5-year period.

GLANCE AT LIC MF CONSUMPTION FUND

Here are key details of the LIC MF Consumption Fund.

• NFO opened on October 31, 2025 and closes on November 14, 2025. It is an open-ended active fund, which looks to beat the fund benchmark; Nifty India Consumption TRI. The fund will be available for continuous sale and repurchase from November 25, 2025.
• On the risk-o-meter, LIC MF Consumption Fund is classified as “Very High Risk,” due to its substantial exposure to equities in general and the Consumption Theme in particular.
• LIC MF Consumption Fund is best suited to investors looking at riding the India consumption story with a higher risk appetite, and with need for diversification.
• There will be no exit load if up to 12% of the units are redeemed. Beyond that, an exit load of 1% of redemption value will be levied if redeemed or switched-out within 90 days of allotment of units. There is no exit load for redemption after 90 days.
• Minimum application amount in NFO is ₹5,000 and in multiples of ₹1 thereof. The fund supports structures like SIPs, SWPs, and STPs. The minimum investment limit will be ₹100 for daily SIP, ₹200 for monthly SIP, and ₹1,000 for quarterly SIP.
• It will offer Regular Plans and Direct plans to investors. In terms of investment options, the fund will offer Growth Option, Dividend (IDCW) Option, and Reinvestment option.
• Sumit Bhatnagar and Karan Doshi will be the dedicated fund managers for the scheme. The fund will invest minimum 80% of the corpus in the consumption theme, while it will retain freedom to invest the balance 20% in other equities or in debt and other assets.

LIC MF Consumption Fund will be treated as an equity fund for tax purposes. Dividends will be taxed at the incremental rate of tax applicable to the investor. Short term capital gains – STCG (held for up to 12 months) will be taxed at 20.8% (including 4% cess). Long term capital Gains – LTCG (held for beyond 12 months), will be taxed at 12.5% after factoring in a base annual exemption limit of ₹1,25,000. There will be no indexation benefits available!