In a recent post, I briefly touched on the importance of diversifying your portfolio. In particular, I discussed why you should invest in the healthcare sector.
In this article, I want to talk about an oft overlooked investment sector – the rural sector.
High Potential, High Risk
In emerging markets like India, the rural sector can hold a huge potential for rapid growth and development.
However, with great potential comes great risk. Rural areas are currently plagued by a lack of infrastructure. Many industries in the sector are exposed to risks of extreme weather and global supply. It could be boom or bust due to external elements. This leads to high volatility in returns.
Other concerns for retail investors might be, “what area of the rural sector do I even invest in?” Thankfully, there are professionals who keep a close look on the industry. And they allow you to invest with them – a mutual fund. One firm that offers such a mutual fund is the world renowned Franklin Templeton Investments.
Short profile: Franklin Templeton Investments is a well-known brand in the world of Investment Management Solutions. The company boasts of awesome investment plans suited for its varied clients. The investment plans in Franklin Templeton mutual fund are some of the best in the industry and are designed after extensive research work and are based on current market growth statistics.
In a note by Franklin Templeton Investments, Outlook 2018, India, the Franklin CIO (Chief Investment Officer) Mr. Anand Radhakrishnan, has stated that the rural demand is likely to put the consumption sector in the limelight this year.
Growth in the Rural Sector Vs Growth In The Urban Sector
Growth in the rural sector has picked up undoubtedly in the last two years, thanks to the good monsoon rains with minimal disruption in supply. While the urban sector also has seen the evidence of growth, but the rural growth has outpaced its counterpart. This trend in rural growth is likely to continue in 2018 too provided the rains keep pouring as mostly the rural growth depends on the farm output.
How Growth In The Rural Sector Will Lead To Rural Demand In The Consumption Sector
The growth in the rural sector is likely to provide a sharp pickup in rural demand in the consumption market. During this phase of growth, automobiles, construction companies, consumer durables and materials will outgrow according to Radhakrishnan. Also industrial sectors like banks, capital goods and engineering will flourish as foreseen by Radhakrishnan. This acceleration to a higher growth from a low growth will lead to stock price movement. This revival in economy is forecasted to continue for few years now.
How Should Retail Investors Manage Their Funds
Radhakrishnan advises investors to get their fund allocation plans ready primarily. Investors should channelize funds to equity investments like Franklin Templeton mutual fund. This can be done by diversifying funds into different Franklin Templeton mutual fund schemes available.
Which Sectors Should Investors Primarily Focus On
Radhakrishnan is very positive about financial sectors like banking, NBFCs, Insurance and rating agencies. The cement sector is also likely to see a boom in the consumption market. From the rural point of demand in the consumption market, two wheelers will definitely have a better growth in the automobiles sector. Commercial vehicles and Cars (four wheelers) are predicted to soon catch up the growth in the automobiles sector too.
The Drive In Consumption Sector And Investment Plans
According to the Franklin Templeton CIO, the recovery in rural sector will lead to better consumption power, both in domestic and non-durables with an increase in cash flow. Rural spending has been predicted to drive the consumption market with a thrust on affordable housing, electrification and up gradation of rural roads.
This would also lead to a better investment market favourable for equity investments, like short term or long-term Franklin Templeton Mutual Fund schemes. Such improved corporate earnings will also favour the revival in private capex and lead to better lending capacity of banks in the public sector.
How Can Investors Take Advantage Of This Emerging Trend
Franklin Templeton advises its customers to reap the benefits of this emerging trend by investing in good equity funds. Investors should go for large-cap stocks primarily. Some risk taking in mid and small cap companies may be taken by investors too. This would allow investors to reap some medium to long term benefits in funds. Franklin Templeton mutual fund investment schemes have been designed keeping this emerging trend in view where investors can make the most from this rural consumption drive in 2018.
How To Choose An Equity Investment In A Secured Way
While equity investments like investments in mutual funds are not outside the chances of market risks, but when properly researched and chosen wisely, mutual funds can be a great way of benefitting your funds. Investors should look for mutual funds which have performed well in the past.
This would allow investors to invest in a secured way with a correct balance between returns and risk. Investors must read the risk factors carefully before investing in funds. While some mutual funds have high risk factors, Franklin Templeton mutual fund schemes offer its customers plans with moderate risk factors. The returns are quicker and safer as the company eyes on short term market fluctuations.
Why Investing In Franklin Templeton Mutual Fund Is A Good Choice For Investors
Franklin Templeton is a brand in itself in the world of mutual fund investments. The company supports the interest of its investors and helps them choose funds that would yield potential returns. Investors get access to discounted and undervalued stocks and stocks with low volatility, thus reducing the risk of returns. Franklin Templeton mutual fund schemes also provide tax benefit to the investors.
