What are business cycle funds?
Jul 19, 01:07

On July 16, 2021, Tata MF launched a business cycle fund. Aditya Birla MF may also soon launch a similar fund. As fund houses largely expect the economic cycle to turn, the theme looks attractive for some. What do these funds do? Equity fund managers usually follow a bottom-up strategy i.e. first look at fundamentals of a company and then a sector. In a business cycle fund, it's the opposite. Fund managers first identify sectors expected to see a turnaround in their own business cycles. A rising Indian economy bodes well for metals, oil and gas and capital goods, among other sectors. Then, she picks stocks. The risk here is that if she chooses the wrong sector at the wrong time, the fund suffers.

Business cycle gfx