Sushil Bajaj |
These are a subset of thematic, equity, mutual funds, that invest based on the current phase of the economic and business cycle. Business cycle funds dynamically allocate capital to sectors and industries expected to outperform at a specific point in the business cycle.
For example:
During expansion, the fund will prefer investing in cyclical segments such as banking, auto, and infrastructure. During slowdown or recession, it could prefer defensives such as FMCG, IT, and pharma. Business cycle funds are thus, active, tactical allocation funds that aim to generate superior returns by profiting from rotations across sectors based on changing trends in the economy.
| Particulars | Details |
|---|---|
| Scheme Name | HDFC Business Cycle Fund |
| Fund House | HDFC Mutual Fund |
| Category | Equity – Thematic (Business Cycle) |
| Scheme Type | Open-ended |
| Date of Launch | February 11, 2022 |
| Benchmark | NIFTY 500 Total Return Index (TRI) |
| Minimum Investment | Lump Sum: ₹100; SIP: ₹100 |
| Exit Load | 1% if redeemed within 1 year |
| Fund Manager | Mr. Prashant Jain & Team (as per scheme factsheet) |
| Risk Level | Very High |
| Suitable For | Investors with 5+ year horizon, looking for tactical allocation to sectors aligned with business cycles |
The main goal of HDFC Business Cycle Fund is to generate long-term capital appreciation by investing in equities and equity-related instruments that are expected to benefit from various phases of a business cycle.
The fund’s benchmark is NIFTY 500 TRI. NIFTY 500 TRI Index is a Common Index made up of the top 500 companies by market capitalization in the constituent indices. Because this index captures ~96% of India’s market capitalization, it allows for broad-based comparisons across the Universe of equity indices.
Macro & Micro Approach: We believe in keeping our portfolio allocation focused through a macroeconomic cycle while using bottom-up stock picking for selection.
Sector Rotation: We focus our allocation in sectors expected to benefit from the prevailing business cycle (e.g., in an expansion, financials will dominate our portfolio’s exposure, while in a slowdown, FMCG will occupy a lion’s share).
Diversified Exposure Across Market Cap: The managers employ a different allocation for investments in the large, mid, and small-cap companies depending on opportunities.
Active Management of Portfolios: Portfolios are frequently adjusted according to the business cycle outlook.
Risk Management: We consider valuations, earnings growth, and potential sectoral concentration risks too.
Dynamic allocation: The fund shifts its portfolio across sectors based on the state of the economy (expansion, slowdown, recovery).
Diversification: Allows exposure to many sectors rather than being concentrated in one investment theme.
Professional Management: The fund is managed by the vast experience and track record of HDFC MF’s investment team.
Opportunity to benefit during a cyclical uptrend: The fund can benefit from sector rotation when the economy shifts pace.
Long-Term Growth potential: It is ideally suited only for investors who are willing to ride through cycles for wealth creation.
You can easily invest through our online investment platform.
Q: Will I have short-term volatility?
Yes, as the fund rotates among cyclical and defensive sectors, as such, returns will ebb and flow in the short-run. This fund is best suited for long-term investors willing to invest for 5+ years.
Q: Can I time my entry in this fund?
It is very difficult to time the business cycle. That is why we recommend systematic investment plans (SIPs) in an uncertain environment.
Q: Is this fund good for conservative investors?
Not really. This fund is designed for moderately aggressive investors.
Q: Are there hidden costs?
No. All the expenses and costs such as expense ratio and exit load are provided in the factsheet in a transparent manner.
Q1. Is HDFC Business Cycle Fund good for SIPs?
Yes, in an uncertain environment, SIPs allow for rupee-cost averaging which reduces the timing risk of your investment.
Q2. What is the minimum recommended horizon?
Recommended to be prepared to invest for at least 5 years.
Q3. What kind of investor should consider this fund?
Moderately aggressive investors who believe in business-cycle investing.
Q4. What is the benchmark of HDFC Business Cycle Fund?
NIFTY 500 TRI.
Q5. Is it a risky fund?
Yes, it is rated as Very High Risk because it invests in equities across cycles.
The HDFC Business Cycle Fund is a thematic equity scheme that dynamically rotates from one sector to the next based on the stage of the economy. With a flexible asset allocation strategy, sectoral diversification and actively managed by professional money managers, it offers investors an opportunity to capitalize on cyclical changes in the economy. This fund is most appropriate for investors with a long-term horizon (5+ years) and a moderate-to-high risk profile, who are seeking tactical exposure to India’s growth story through business cycle investing.
Disclaimer:- Mutual Fund investments are subject to market risks, please read scheme related documents carefully before investing.
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