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HDFC Asset Management Company Ltd has announced the launch of a business cycle fund, which aims to invest in businesses likely on the cusp or midst of a favourable business cycle.

The new fund offer (NFO) for HDFC Business Cycle Fund opens on 11 November and closes on 25 November.

According to the fund house, HDFC Business Cycle Fund will look to achieve better investment outcomes by investing in companies likely to enjoy favourable business cycles, while avoiding companies about to enter / in a business downcycle.

Business Cycle investing enjoys benefits, such as higher confidence on business cycle forecasts against economic cycle forecasts. In business upcycles, investors may gain from dual benefits of earnings growth and improvement in valuations. In such investing, one needs an agile investment strategy that dynamically rotates investments based on assessment of stages of business cycles.

Navneet Munot, managing director and chief executive officer, HDFC Asset Management Co. Ltd, said, “In an era marked by increasing complexities and shortening of business cycles, positioning portfolios well should be a rewarding activity. HDFC AMC aims to support investors to stay ahead by using a blend of top-down and bottom-up approach, leveraging strengths in its research and fund management team. The launch of this NFO is a further step in the direction of being the wealth creator for every Indian.”

The scheme will be managed by Rahul Baijal, who has over 20 years of experience in fund management and equity research.

Baijal said, “We have observed business cycles across history, and how they impact fundamentals. India is expected to be among the fastest growing large economies, and strong fundamentals hold us in good stead in a global environment of rising risks. Factors such as improving health of the banking and real estate sector, increasing investments by corporates bode well for equities over medium to long term. We believe that investing in the business cycle fund could be a good allocation strategy and the fund could be held by investors for long periods of time.”

HDFC Business Cycle Fund will manage risks by being adequately diversified across sectors, sub sectors or market capitalizations, and across number of stocks.

The fund house said that investors may consider this product to gain exposure to businesses likely on the cusp or midst of favourable business cycles, via a fund that is agile in rotation of investments based on assessment of stages of business cycles, and with an investment horizon of three or more years.

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