Same Theme, 10x Gap: Which Consumption Fund Wins?

Consumption mutual funds invest in similar companies but delivered wildly different 3-year SIP returns — from under 1% to over 10%. Stock selection, sector bets, and fund manager calls made all the difference. Here's what investors should know.

Here's what happened: Only two out of several consumption-themed mutual funds delivered over 10% SIP returns over the past three years, while at least one scheme returned below 1% in the same period.. The wide return gap within the same category came down to individual stock selection — funds that leaned into discretionary spending (hotels, QSR, premium retail) outperformed those overweight in slow-growing staples.. Consumption as a theme covers a broad universe of sectors — FMCG, auto, retail, media, hotels, and durables — giving fund managers significant latitude that leads to very different portfolios despite the same label..

What you should do: Compare actual portfolio holdings of any consumption or thematic fund you own — check the top 10 stocks on the AMC website or Value Research before assuming two funds in the same category are similar.. Check your SIP's XIRR (not just absolute NAV growth) on your mutual fund app or Kuvera/Zerodha Coin — XIRR is the real measure of your SIP's compounding performance over time.. Avoid allocating more than 10-15% of your overall mutual fund portfolio to any single thematic fund — use diversified large-cap or flexi-cap funds as the core to limit concentration risk..

Pro tip: In thematic funds, a low expense ratio matters even more — a 0.5% annual difference in TER compounds to thousands of rupees on a 5-year SIP. Always compare direct vs regular plan returns.

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