GST overhaul: Is this the right time to invest in consumption themed mutual funds?
Consumption-themed mutual funds are back in the spotlight, delivering strong returns in recent months and gaining renewed investor interest after Prime Minister Narendra Modi’s Independence Day announcement on major GST reforms. According to Value Research data, consumption-based funds have posted an average return of 12.28% in the last six months, with some schemes significantly outperforming. The Bank of India Consumption Fund led the pack with gains of 18.05%, followed by Mirae Asset Great Consumer Fund at 15.92% and Kotak Consumption Fund at 15.59%. On the lower side, Quant Consumption Fund delivered just 3.37%, while ITI Bharat Consumption Fund, launched in February 2025, marked its entry into the category.
The rally comes at a time when the government is preparing a sweeping revamp of the Goods and Services Tax (GST) structure. The proposal seeks to replace the current four-tier system with two main slabs of 5% and 18%, while retaining a 40% rate for luxury and sin goods. Most products taxed at 12% are likely to shift to the 5% bracket, while goods currently at 28% are expected to move to 18%.
Analysts say this change could act as a direct consumption booster, improving affordability and driving higher demand across categories such as FMCG, autos, consumer durables, and telecom — the core sectors where consumption funds are concentrated.
“GST reform and income tax relief measures are aimed at boosting household spending power. Unlike infrastructure or capital goods funds, consumption funds directly benefit when families spend more. However, these funds can be volatile if demand slows or sentiment weakens. Timing and selectivity remain critical,” said Trivesh D, COO, Tradejini.
Performance data underscores this dual nature. Over the last year, the category was flat, posting an average loss of 0.52%, but over a three-year period, returns averaged 16.15%, with Tata India Consumer Fund topping at 18.65%. In the same horizon, Mirae Asset Great Consumer Fund returned 18.20%, while ICICI Pru FMCG Fund lagged at 9.30%.
Experts recommend investors cap their allocation to consumption funds at 10–20% of their equity portfolio, given the sectoral concentration risks.
“The tax reform, combined with falling interest rates, rural demand recovery and a good monsoon, sets the stage for long-term consumption growth. The benefits, however, will flow gradually as reforms are implemented,” Trivesh added.
Top Consumption Funds in 2025
Consumption-themed mutual funds continue to attract investor interest as India’s spending-driven growth story gains momentum. Among the leading funds in this category, SBI Consumption Opportunities Fund, launched in 1999, stands out with an AUM of over ₹31.23 bn as of July 2025. The scheme follows a multi-cap approach but has recently tilted towards largecaps. With 47 holdings and top allocations to Bharti Airtel, ITC, and Britannia, it has consistently outperformed its benchmark, delivering strong risk-adjusted returns.
Nippon India Consumption Fund, with assets worth ₹26.64 bn, maintains a compact portfolio of 36 stocks. Its top picks include Mahindra & Mahindra, Bharti Airtel, and ITC. The fund adopts a mix of top-down and bottom-up strategies and has generated impressive rolling returns of over 21% in 3-year and 5-year horizons.
Tata India Consumer Fund, launched in 2015, has ₹24.82 bn in assets and follows a GARP (Growth at Reasonable Price) strategy. With 39 holdings, including ITC, Eternal, and Radico Khaitan, it balances largecaps with select mid and smallcaps.
Meanwhile, Mirae Asset Great Consumer Fund, managing ₹44.03 bn, is the second-largest in the category. Focused on companies with strong ROE and competitive edge, it has delivered consistent returns above 20% across multiple time frames.
6-month return of Consumption funds
Scheme Name 6-Month Return (%) Remarks
Bank of India Consumption Fund 18.05 Highest return in the category
Mirae Asset Great Consumer Fund 15.92 Strong performer
Kotak Consumption Fund 15.59 Competitive returns
Quant Consumption Fund 3.37 Lowest return in the category
ITI Bharat Consumption Fund N/A New entrant (launched Feb 2025)
| Scheme Name | 1 Yr (%) | 3 Yr CAGR (%) | 5 Yr CAGR (%) |
| ——————————— | ——– | ————- | ————- |
| SBI Consumption Opp Fund | 18.52 | 21.84 | 26.07 |
| Nippon India Consumption Fund | 18.74 | 21.83 | 26.18 |
| Tata India Consumer Fund | 22.09 | 20.98 | 23.01 |
| Mirae Asset Great Consumer Fund | 18.30 | 20.84 | 23.81 |
| **Category Average** | 16.69 | 19.38 | 22.09 |
| **Nifty India Consumption – TRI** | 19.59 | 18.77 | 18.56 |
| **Nifty 50 – TRI** | 13.60 | 13.69 | 18.78 |