5 reasons to invest in a Axis India Manufacturing Fund
India is well on its way to achieving its vision of becoming a $5 trillion economy by 2027. India is currently the 5th largest economy globally. In this promising trajectory of India's economic landscape, the manufacturing sector stands as a key driver with the potential to reach an impressive US$ 1 trillion by 2025. It also plays a crucial role in shaping employment opportunities across the country.
Against this backdrop, a manufacturing-themed fund can offer scope for capital appreciation with a strategic focus on growing sub-pockets and companies in the burgeoning sector. It can serve as a valuable addition to one’s portfolio in terms of a diversified approach to investing.
Here are five reasons to consider investing in a Axis India Manufacturing Fund
Riding the Manufacturing Wave:
India’s manufacturing sector is a theme that is fast evolving. India is poised to become a leading manufacturing hub globally owing to drivers like rising demand, investments, government support via schemes such as PLI, Make in India, Aatmanirbhar Bharat, etc., and augmented supply capabilities. There has been a 28% increase in the registration proportion of manufacturing companies up to CY22 vs. CY18, which underscores the sector's significant momentum.
The government's initiative aims to increase the manufacturing sector's contribution to GDP from 17% to 25% by 2025. A Axis India Manufacturing Fund will aim to ride this wave. Further, India's rising share in global merchandise exports emphasizes the fund's alignment with the nation's goal of becoming a leading exporter. In addition, India’s rising prominence on the global map in a multi-polar world also opens up a favourable geopolitical climate for our economy.
Alignment with India’s Growth Story:
As India moves further on its growth path, several sectors have been catalyzing this growth. For instance, the chemical sector in India is the 6th largest chemicals producer and the 3rd in Asia. The Automobile industry too is poised to claim the title of the 3rd largest in the world by 2030. Be it textiles, defence, or electronic systems, India’s manufacturing sector is well on its way to make a prominent mark on the global landscape.
Further, the infrastructure boost and the tech stack are transforming connectivity and logistics networks. These developments are supporting the ease of doing business and facilitating seamless trade.
As India becomes one of the fastest-growing economies, a Axis India Manufacturing Fund strategically positions itself to benefit from India's economic reforms. In addition, the enabling conditions for growth are already in place, be it rising domestic and foreign demand, premiumization, or soaring consumption. Given the government’s focus on the manufacturing sector, the sector could see more FDI inflows in the coming years. Manufacturing has been the largest gainer of FDI flows among sectors. As the economy gallops, investors can benefit from various emerging themes.
Thematic fund:
As a thematic fund focused on a particular sector, a manufacturing fund can allow one to participate in a potentially evolving growth story with ease. It can also diversify the overall portfolio by adding a unique investment approach. Investors should, however, bear in mind that thematic funds are high on risk. Therefore, investors must be well-informed about their risk appetite and capacity.
Diversified exposure:
Typically, a sector or thematic fund like a manufacturing fund offers access to multiple sub-sectors like automobiles, defense, chemicals, and so on.
The fund actively positions itself in sectors poised for significant economic growth. For instance, it could potentially tap the anticipated $300 billion electronics boom by 2030, the targeted $25 million turnover in the defense sector by 2025, and India's ambition to become the world's third-largest automotive market by 2026. This deliberate sectoral focus ensures active participation in India's key growth narratives.
This broad spectrum of investments mitigates risk to an extent by spreading investments across various facets of the manufacturing theme. Further, there may also be diversification in terms of large, mid, and small-cap companies. This diversification approach offers investors a well-rounded portfolio positioned for resilience and expansion.
Potential for wealth creation:
The fund’s focus on a specific theme that has scope to grow means potential for capital appreciation over the long term. A manufacturing fund is aligned with the narrative of India's soaring manufacturing prowess and offers a compelling wealth creation opportunity.
A manufacturing fund aims to leverage the underlying growth prospects of the Indian manufacturing sector. Investors aiming for long-term wealth and having a high-risk appetite can consider investing in this fund. Although this fund carries very high risk, it can be used as a diversified strategy for one’s portfolio with an investment horizon of 5+ years.
Add a manufacturing fund to your portfolio today and see the growth story unfold!
References
https://www.worldbank.org/en/news/press-release/2023/10/03/india-s-growth-to-remain-resilient-despite-global-challenges
IBEF May-2023 PPT, Bain & Company, News Articles.
Bloomberg, Axis MF Research, Avendus Spark.
IBEF May-2023 PPT, Bain & Company, News Articles.
Data as on 30th September 2023. Source: Bloomberg, Axis MF Research, Avendus Spark
IBEF May-2023 PPT, Media sources, Invest India, Press Information Bureau, MakeinIndia.
IBEF May-2023 PPT, Media sources, Invest India, Press Information Bureau, MakeinIndia.
Mutual fund investments are subject to market risks; read all scheme-related documents carefully.