Business Cycle Funds Deliver Strong Returns Amid Volatility

The business cycle funds have proven to be a safe haven for investors during the current volatile times, delivering strong returns and outperforming benchmarks. With a 26% rise in assets under management (AUM) to ₹32,459 crore, these funds have shown their potential in navigating market cycles.

Business Cycle Funds Deliver Strong Returns

The thematic funds focused on the business cycle of mutual funds have delivered impressive returns, outperforming the benchmark index. In the last year, business cycle funds have delivered an average return of 3.15 per cent, compared with Nifty-500’s 0.85 per cent. Similarly, over two years, this ‘category’s average return was 3.29 per cent, against 2.42 per cent for the benchmark index.

Top Funds Deliver Stronger Returns

The top-performing funds in this category have delivered even stronger returns. Mahindra Manulife Business Cycle fund 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. ICICI Pru MF, the largest in the category with AUM at ₹9,663 crore, has delivered returns of 4 per cent and 6 per cent in the same period.

Market Impact and Details

• The asset under management of 11 funds in this category has jumped 26 per cent to ₹32,459 crore (₹25,776 crore) as of May-end.
• Business Cycle Funds have the flexibility to dynamically allocate capital across sectors and industries expected to benefit at different stages of the economic cycle.
• The category has benefited from India’s ongoing economic expansion, manufacturing push, infrastructure investments, and increasing domestic consumption.

Key Takeaways

• Business cycle funds have delivered strong returns, outperforming benchmarks, with an average return of 3.15 per cent in the last year.
• The top-performing funds in this category have delivered even stronger returns, with Mahindra Manulife Business Cycle fund delivering 8.30 per cent in one year.
• The category has benefited from India’s ongoing economic expansion and increasing domestic consumption.

FAQs

What is the Business Cycle Fund category?

The Business Cycle Fund category is a type of thematic fund that focuses on the business cycle of mutual funds. These funds have the flexibility to dynamically allocate capital across sectors and industries expected to benefit at different stages of the economic cycle.

How do Business Cycle Funds perform during market cycles?

Business Cycle Funds have shown their potential in navigating market cycles, delivering strong returns and outperforming benchmarks. The fund management team’s ability to dynamically position the portfolio across sectors expected to benefit at different stages of the economic cycle has been a key factor in their success.

Who can benefit from Business Cycle Funds?

For investors with a relatively higher risk appetite, Business Cycle Funds can serve as an effective diversified allocation to capture opportunities across evolving market conditions, subject to their investment objectives and risk profile.

Conclusion

The business cycle funds have proven to be a safe haven for investors during the current volatile times, delivering strong returns and outperforming benchmarks. With a 26% rise in AUM to ₹32,459 crore, these funds have shown their potential in navigating market cycles. For investors looking to capture opportunities across evolving market conditions, Business Cycle Funds can be a viable option, subject to their investment objectives and risk profile.