In a pioneering move for the Indian mutual fund industry, Groww Mutual Fund has been cleared by the Securities and Exchange Board of India (SEBI) to present a novel investment avenue to the marketplace – the Groww Nifty Non-Cyclical Consumer Index Fund. Making strides in May, this will be a trailblazing venture as the country’s first non-cyclical index fund. Meticulously mirroring the Nifty Non-Cyclical Consumer Index-TRI, the fund’s primary objective is to secure consistent capital growth over the long haul, a prospect particularly enticing for investors seeking solid ground in the nation’s mounting per capita GDP trend.
This innovative open-ended scheme is poised to mainly invest in stable consumption-driven defensive stocks. Non-cyclical businesses, often involved in producing essentials, are resilient to economic fluctuations, thereby attracting investors towards this less volatile sector. Notably, the index tracks top players from essential industries in the non-cyclical consumer realm encompassing Consumer Goods & Services, Telecom, Media & Entertainment, and Textiles, among others.
These sectors offer the indispensable products that consumers require regardless of the economic terrain. The index comprises a carefully curated selection of 30 leading stocks, picked on the basis of their 6-month average free-float market capitalization as recorded in January and July. To maintain balance and mitigate individual security risk, individual stock weights within the index are capped at 10%.
The Groww Nifty Non-Cyclical Consumer Index Fund aspires to parallel the Nitty Non-Cyclical Consumer Index (TRI) closely in its composition and yield. The constituents of the index are a testament to the prudence and strategic foresight embedded in this fund.
A snapshot of the weightage composition of the index is outlined below:
Sector Representation
Weight (%)
Fast Moving Consumer Goods
43.14
Consumer Services
21.48
Consumer Durables
20.08
Telecommunication
11.00
Services
2.57
Textiles
1.07
Media, Entertainment & Publication
0.65
The index leaders include renowned firms with capped weights to ensure risk diversification:
Company Name
Weight (%)
Bharti Airtel Ltd.
9.81
Hindustan Unilever Ltd.
9.90
ITC Ltd.
9.86
Titan Company Ltd.
8.05
Asian Paints Ltd.
6.52
Nestle India Ltd.
4.75
Zomato Ltd.
5.38
Trent Ltd.
4.42
Tata Consumer Products Ltd.
3.50
Avenue Supermarts Ltd
3.44
But how does the Nifty Non-Cyclical Consumer Index stack up against alternatives? Its performance statistics are compelling, outpacing indices like the Nifty 50 over various timelines, showcasing its robustness as a formidable investment channel for the long term.
Index
CAGR_1y
CAGR_3y
CAGR_5y
CAGR_10y
CAGR_15y
NIFTY NON-CYCLICAL CONSUMER
30.80%
18.79%
17.22%
16.38%
17.66%
NIFTY 50
20.74%
17.12%
16.15%
14.57%
15.40%
The resilience of the Non-Cyclical index is further underscored by its performance during economic variability. Its Sharpe Ratio, an indicator of risk-adjusted returns, consistently exceeds those of the Nifty 50 and other benchmarks, signifying a more favorable return per unit of risk over extended periods. These metrics position the index fund as an appealing choice for discerning investors who prioritize stability without sacrificing growth.
Valuations further bolster the case for the Groww Nifty Non-Cyclical Consumer Index Fund. With the current Price-to-Earnings ratio standing below both 5 and 10-year averages, it points towards an attractive entry point.
Now, as India’s investment landscape matures, the impending launch of Groww’s Nifty Non Cyclical Consumer Index Fund NFO is a pivotal moment. This novel index consolidates a strategic diversification with a strong performance record, offering a promising growth trajectory for astute investors intent on a defensive yet proactive approach to their portfolio.
