According to reports, the total AUM (assets under management of business cycle funds have reached Rs 37,487 crore. What’s more significant is that compared to September of 2021, when it stood at Rs 17,238 crore, the AUM of business cycle funds have risen by more than 117%.
Some of the popular business cycle funds in India are HDFC Business Cycle Fund, HSBC Business Cycles Fund, Axis Business Cycles Fund, Aditya Birla Sun Life Business Cycles Fund, Bandhan Business Cycle Fund, Baroda BNP Paribas Business Cycle Fund, Quant Business Cycle Fund, ICICI Prudential Business Cycle Fund etc.
What are business cycle funds?
The name “Business Cycle Fund” gives an inkling into how these funds work. The managers who are in charge of these funds attempt to spot the economic cycles that affect particular stocks and then identify them. The idea is to zero in on those stocks that would perform well in these given conditions. Experts say that such fund managers rotate investments across sectors based on the phases of an economy, which are typically identified as slowdown, recession, early recovery and mid-cycle growth.
Experts typically give examples of infrastructure and financial service sectors do well in the recovery phase of an economy. Automobiles and consumer goods firm stocks too usually do well in such a phase. In phases like slowdowns, pharmaceuticals, consumer staples and utilities can perform significantly.
Whom are Business Cycle Funds suitable for?
The past 1 year has been a year of bumper returns for business cycle funds, despite the late volatility. The Indian investment climate is maturing rapidly and there is a growing category of investors who don’t mind a degree of volatility while seeking high returns. Business cycle funds could be ideal for such investors, feel experts.
Business Cycle Funds Returns
According to a report, in the year ending on October 17, 2024, HSBC Business Cycles Fund returns has been a super return of 56.3%. Following closely on its heels is Mahindra Manulife Business Cycle Fund with 56.17% while Quant Business Cycle Fund is the other one above the 50% mark at 50.8% returns. The other performing funds in this category are from Baroda BNP Paribas (44.58% return), ICICI Prudential (42.27%), Tata Mutual Fund (41.26%), Kotak (40.03% returns), Axis (39.02%), Aditya Birla Sun Life (36.33%) and HDFC (31.97%).
