Business Cycle Funds Deliver Benchmark-Beating Returns in Volatile Market

The business cycle funds have emerged as a top performer in the current volatile market, delivering benchmark-beating returns with an average return of 3.15 per cent in the last year, compared to Nifty-500’s 0.85 per cent.

Business Cycle Funds Outperform Benchmarks

The business cycle funds have witnessed a significant surge in their asset under management (AUM), jumping 26 per cent to ₹32,459 crore as of May-end, with the largest fund, ICICI Pru MF, managing ₹9,663 crore.

Top-performing funds in this category include Mahindra Manulife Business Cycle fund, which delivered a return of 8.30 per cent in one year and 5.75 per cent in 2 years, while Kotak Business Cycle delivered 5.55 per cent and 7.36 per cent in the same period.

Flexibility in Sector Allocation

The business cycle funds have the flexibility to dynamically allocate capital across sectors and industries expected to benefit at different stages of the economic cycle, unlike sectoral or thematic funds that concentrate investments in a single theme.

Market Impact and Details

• The ongoing economic expansion in India, manufacturing push, infrastructure investments, and increasing domestic consumption have supported the category’s performance.
• The fund manager actively adjusts sector allocations as industries move through different phases of the business cycle, supported by disciplined stock selection.
• For investors with a relatively higher risk appetite, this category can serve as an effective diversified allocation to capture opportunities across evolving market conditions, subject to their investment objectives and risk profile.

Key Takeaways

• The business cycle funds have delivered an average return of 3.15 per cent in the last year, compared to Nifty-500’s 0.85 per cent.
• The AUM of these funds has jumped 26 per cent to ₹32,459 crore as of May-end.
• The flexibility in sector allocation and disciplined stock selection have contributed to the category’s success.

FAQs

What are Business Cycle Funds?

Business cycle funds are thematic funds that focus on the business cycle of mutual funds, delivering benchmark-beating returns.

How do Business Cycle Funds Work?

These funds have the flexibility to dynamically allocate capital across sectors and industries expected to benefit at different stages of the economic cycle.

What are the Key Factors Contributing to the Category’s Success?

The ongoing economic expansion in India, manufacturing push, infrastructure investments, and increasing domestic consumption have supported the category’s performance, along with the fund manager’s ability to dynamically position the portfolio across sectors.

Conclusion

The business cycle funds have emerged as a top performer in the current volatile market, delivering benchmark-beating returns with an average return of 3.15 per cent in the last year. With the flexibility to dynamically allocate capital across sectors and industries, these funds offer an effective diversified allocation for investors with a relatively higher risk appetite. As the market continues to evolve, it is essential to stay informed about the latest trends and developments in the business cycle funds category.