Why did consumption focused funds underperform?

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© Nikhil Walavalkar Why did consumption focused funds underperform?

The Covid-19 impact on consumer spending had a negative effect on consumption-themed mutual funds. These funds gave 42 percent compared with the 50 percent average returns by large and midcap funds in the one-year period ended August 26, 2021, according to Value Research. Consumers’ spending—that could be controlled—went down in areas like movies and multiplexes, aviation, clothing and automobiles. The government gave away money to rejuvenate the economy, but that also led to inflation. Aside from making things expensive for the common man, inflation spells further bad news for consumer companies because their sales remain subdued.

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