IN A VOLATILE MARKET, every investor is concerned about one thing—how will his portfolio perform. Then comes the concern about where should you invest to make the most of the volatility. As is usually said, a market plunge is the best time to invest in fundamentally strong avenues, as you can enjoy the benefit of buying more assets for less. In mutual funds, you can also benefit from the concept of rupee cost averaging, especially if you have a systematic investment plan in place, as your money will be able to get you more units, thus helping you earn higher returns when the market makes its rise. If you have been considering thematic investment opportunities in the current market scenario, here is some food for thought.
Why thematic investing
Going for thematic investing helps you leverage the potential inherent in a theme you believe in, be it consumer durables, pharmaceuticals, transport or logistics. You can simply pick the theme you are bullish on, and invest in the different companies comprising the underlying theme. This investment strategy adds firepower to your portfolio while also helping you diversify across different companies adhering to the theme you believe in. You also narrow down your research universe, making the investing journey much simpler and streamlined. One of the major themes you should consider backing is transport and logistics.
Transportation and logistics
Considered as an economic growth engine, the transport and logistics theme consists of industries broadly classified under 3 key sectors – Auto Original Equipment Manufacturers (OEMs) such as manufacturers of 2-Wheelers, 3-Wheelers, Tractors, etc., Auto Ancillaries manufacturing batteries, electronics, tyres, etc. and Logistics companies catering to the supply chain, rail, shipping, etc. This diverse categorisation makes the transport and logistic theme an exceptionally diversified one capable of offering robust returns to investors. Let us consider each of these categories in detail.
As we evolve, luxuries turn into necessities, and this is extremely true in the case of automobiles. In this scenario, the auto original equipment manufacturers sector, with its presence across different products, offers multiple investment opportunities. Moving to the next component, auto ancillaries add a lot of value to the automobiles we see on the road. Indeed, the automobile sector is incomplete without the ancillary industry, including elements such as sensors, protective side trims on door panels, seat upholstery, instrument panel, fuel tank door, etc. The third category is logistics, a part of the ecosystem which supports both the luxury and the necessity. As a simple example, consider your shopping patterns – how frequently do you use an Amazon or Flipkart for delivery? Each time you place an order, it is logistics which steps in to fulfil your order and deliver the items you purchase. Logistics helps you get anything, anytime and anywhere.
With the increase in user demands and requirements, and the focus on an aspirational lifestyle, the transport and logistics theme is set for a surge, making it an excellent investment opportunity.
Ways to invest
Once you are convinced about the potential of the theme, you will consider ways through which you can invest in it. One of the easiest ways to capitalise on the theme is by investing in a transportation and logistics based thematic fund which is actively managed. This will ensure that the fund manager will carry out trades which will work for the portfolio in the long run. Such a fund will typically invest in companies like Bajaj Auto, Mahindra & Mahindra, Tata Motors, TVS Motor, Eicher Motors, Ashok Leyland and Maruti Suzuki. Under the auto ancillaries, Amara Raja Batteries, Apollo Tyres, Motherson Sumi Wiring, MRF, Minda Corporation and Bosch are some of the names which could be a part of the portfolio. The fund will also invest in logistics majors such as Blue Dart Express, Container Corporation of India, Delhivery, Gujarat Pipavav Port, Shipping Corporation of India, Mahindra Logistics and VRL Logistics, thus offering your portfolio the acceleration and power it requires to shine. These names are only indicative in nature such that the readers/investors can have a better understanding of the universe of investments.
To conclude, as India moves to be a $5 trillion economy, transportation and logistics could play a vital role in this phase. ICICI Prudential AMC has recently launched ICICI Prudential Transportation & Logistics Fund and the NFO period is open from Oct 6 to 20, 2022.
The author is the founder of Gururam Financial Services Pvt Ltd