Defensive bets such as FMCG stocks are known to cap losses well in falling markets. These stocks also tend to be market favourites in rallies. The two FMCG funds — ICICI Pru FMCG and SBI FMCG Fund — which gained 20-24 per cent over the past year when the broader indices too have gained handsomely, bear testimony to this fact.
A big part of the rally has happened in the past three months, in which BSE FMCG and Nifty FMCG Index outperformed broader indices such as Sensex and Nifty 50 by 2-3 percentage points. FMCG funds, in turn, have raked in 16.5 per cent return, second only to banking funds that delivered around 17.4 per cent return. Interestingly, over the long term too, FMCG funds have delivered good returns. Over three-, five- and 10-year periods, these funds have delivered 17.5 per cent, 18 per cent and 19 per cent, respectively.
