Bajaj Finserv Consumption Fund: Participate in the India Growth story

The Bajaj Finserv Consumption Fund, an open-ended equity scheme focused on India's consumption theme was launched in November 2024. In this article we will highlight the fund's investment strategy, market trends, and potential benefits for investors.

Drivers of Consumption in India:

Domestic consumption is one of the most important themes of the India's growth story as the country is largely a domestic consumption driven economy. Although India is expected to become the third largest economy of the world by 2030, there is a long runway for per capita income and consumption growth in India. We have a young population; the average age is just 29 years (Source: Ministry of External Affairs). As per National Family Health Survey 2021, 88% of the population is below the age of 60 and more than half of the population is below 30. Per capita income is also rising and has already crossed the $2,000 mark. Favourable demographics, rising income levels, growing middle class, and urbanization are driving consumption.

Consumption as a theme

The changing face of consumption in India has led to an increase in demand for premium products, health & wellness, and quick commerce. Significant growth potential in underpenetrated markets like rural consumption, online food delivery, and FMCG are catalysing the demand drivers of our consumption growth story. Let us look at each point:

Rising per capita income: Per capita income is expected to exceed $3,000 by 2025 resulting in a growing middle class expected to reach 40% by 2030, driving discretionary spending and boosting purchasing power. Over the next 23 years, per capita income is expected to grow at around 8.7% to $19,416 by 2047. (See graph below)

India's per capita GDP grew from sub $1,000 levels in the mid-2000s to around $2,857 in 2024 (source: PHD Research Bureau). After crossing $2,000 GDP per capita, many emerging economies have witnessed a strong spurt in discretionary consumption as shown in the graphic below.

Source: Bajaj Finserv AMC

As a result of changing demographics and rise in income levels, Indians want to:

• Consume More: Rise in rural consumption and reduced rural-urban inequality has helped household consumption to increase. With the rise in income, Indian consumers spend a higher proportion of their income beyond necessities like food and clothing. (see the graph below)
  
  

  

  Source: Bajaj Finserv AMC, CLSA



• Consume Better: Consumers are prioritizing Quality over Quantity by choosing high-quality, branded goods. Affluent consumers are increasingly opting for luxury brands. For example, the chart below represents automotive sector shifting to meet aspirational demand with growing preference for SUVs.
  
  

  

  Source: Bajaj Finserv AMC, SIAM, CLSA



• Consume Well: COVID-19 has shifted focus towards health and immunity. Demand is rising for products tailored to different lifestyles, such as keto, fortified foods, immunity boosting products. Adoption of digital health technologies has accelerated. Health & wellness market to grow at 15-20% CAGR, with focus on healthy living. The consumer health products market size in FY21 was INR 1.03t and grew at CAGR of 14% over FY 18-21. The chart below shows the growth in 10 Year CAGR of different health sectors.
  
  

  

  Source: Bajaj Finserv AMC, SIAM, CLSA



• Consume Easy: Urban consumers prioritize faster delivery, fresher products, and last-minute purchases due to increased purchasing power and busy lifestyles. Consumers are increasingly opting for on-demand and easy online shopping/food services. Easy credit stimulating easy buying and seamless transactions through UPI and mobile wallets are the new ways that India shops today. Quick Commerce market grew at a CAGR of 148-169% between 2018 and 2023. Quick commerce in online groceries to surge from 10% to 45%, driven by urban demand. Also, quick commerce spending per user rose to Rs13,400 in 2023, from being negligible in 2018. It is expected to be the fastest-growing retail channel in India with a projected 60-80% CAGR by 2028.
  
  

  

  Source: Bajaj Finserv AMC, IBEF, Redseer | GMV – Gross Merchandise Value

Why invest in Consumption?

Consumption outperforms the broader market in the long-term

The Nifty India Consumption Index has historically outperformed the broader market index (Nifty 500 TRI) since the inception of the consumption index. (see the chart below).

Source: National Stock Exchange, Advisorkhoj Research, Period: 01.06.2006 to 30.09.2025

Consumption outperforms broader market with lesser Volatility

The chart below shows the 3 year rolling returns of Nifty India Consumption TRI versus the broader market index (Nifty 500 TRI) since the inception of the consumption index. You can see that the consumption index was able to outperform the broader market index across market conditions.

Source: National Stock Exchange, Advisorkhoj Research, Period: 01.06.2006 to 30.09.2025

The table below shows the return distribution of the Nifty India Consumption Index over different rolling investment tenures versus the broader market index (Nifty 500 TRI). You can see that the consumption index not had lesser percentage instances of negative returns comapred to Nifty 500 TRI, it also delivered higher percentage instances of 12%+ and 20%+ CAGR returns relative over different investment tenures compared to Nifty 500 TRI. The return distribution of Nifty India Consumption Index shows its potential to generate more consistent risk adjusted returns.

Source: National Stock Exchange, Advisorkhoj Research, Period: 01.06.2006 to 30.09.2025. *Nifty India Consumption TRI ** Nifty 500 TRI

More consistent performance across years compared to broader market

Consumption (Nifty India Consumption TRI) delivered more consistent performance outperforming the broader market index (Nifty 500 TRI) 7 times in the last 10 years including the current year (see the chart below).

Source: National Stock Exchange, Advisorkhoj Research, Period: 01.01.2016 to 30.09.2025

Less Drawdown compared to broader market

The chart below shows the drawdowns of the consumption index versus the broader market index (Nifty 500 TRI) since the inception of the consumption index. You can see that the consumption experienced smaller drawdowns compared to Nifty 500 TRI.

Source: National Stock Exchange, Advisorkhoj Research, Period: 01.06.2006 to 30.09.2025

Megatrends in consumption

The Bajaj Finserv Consumption Fund

The Bajaj Finserv Consumption Fund aims to capitalize on India's evolving consumption patterns, driven by rising incomes, urbanization, and changing consumer preferences. It offers a diversified portfolio with exposure to high-growth sectors, making it suitable for long-term investors seeking to benefit from India's consumption megatrends. The Bajaj Finserv Consumption Fund focuses on companies benefiting from India's growing domestic consumption. The fund targets sectors like FMCG, automobiles, consumer durables, healthcare, and realty.

Investment strategy of Bajaj Finserv Consumption Fund

INQUBE Investment Philosophy

Portfolio Construct:

Source: Bajaj Finserv Fund Factsheet as on 30^th September 2025

Why invest in Bajaj Finserv Consumption Fund?

• Bajaj Finserv Consumption Fund is a TRUE TO LABEL consumption fund.


• Consumption is a sector that has demonstrated long term return potential and at the same time has witnessed lower drawdowns during down cycle. This makes it an important diversifier in an investor's portfolio


• The fund invests in Consumption MEGATRENDS by identifying potential growth stories.


• The fund is market cap agnostic. It has the flexibility to investment across market cap segments


• The fund targets future profit pool companies which can be potential wealth multipliers for investors

Who should invest in Bajaj Finserv Consumption Fund?

• Investors looking for capital appreciation over long investment tenures from India's consumption growth theme


• Investors looking to do lumpsum investments


• Investors with higher risk appetites


• Investors looking for tactical allocation in their overall equity portfolio


• Investors with minimum 5-year investment tenures

Consult your financial advisors or mutual fund distributors to understand if Bajaj Finserv Consumption Fund is suitable for your investment needs.