This monsoon could be the harbinger of good news for investors in fast moving consumer good companies (FMCG). In its report yesterday, the meteorological department forecasted normal monsoon. This will impact consumer durables and consumer product companies in a significant way as a thriving rural economy will translate into improved earnings for these companies.

Personalfn.com had earlier subscribed to the view that FMCG funds were rather attractive (and safer) given the low valuations of FMCG companies. The rather alarming fall in software stocks and (consequently software funds) was another reason for investors to look at FMCG funds. Well the positive outlook for monsoons seems to re-affirm that view. Good monsoons means an improved demand scenario in the rural segments for companies like Hindustan Lever, Britannia, Marico. So FMCG and FMCG-heavy funds could witness a turnaround in fortunes.

Open-ended FMCG Schemes	NAV (Rs)	Last week	Last month	Last year	Since inception
Pru ICICI FMCG Fund (Gr)	8.9	-2.7%	-8.3%	0.0%	-13.5%
Kothari Pioneer FMCG (Gr)	10.5	-3.9%	-8.6%	-2.0%	6.6%
Magnum Sector Funds - FMCG	8.0	-4.5%	-11.2%	0.0%	-22.2%

A piece of advice for mutual fund investors. FMCG funds are not tech funds, which means that FMCG funds will not give the kind of returns that investors have come to expect with tech funds. Moreover, the investment in FMCG funds will not pay off from day one. In other words, this investment is meant for investors who have an investment horizon of at least 6 months.

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