HDFC Mutual Fund is set to roll out a new fund offer (NFO) for business cycle fund between November 11 and 25. The fund will be managed by fund manager Rahul Baijal.
The scheme has both plans: regular and direct with sub-options of growth and income distribution cum capital withdrawal (IDCW) option. The latter also offers further options of payout of IDCW and re-investment of IDCW.
It will be a blend of top-down and bottom-up approach. The core of portfolio (up to 80 percent) would be companies likely on the cusp of favourable business cycle, while avoiding companies about to enter in a business downcycle. The investment will be made across large, mid and small caps.
The scheme's benchmark will be Nifty 500 TRI.
The non-core portfolio (up to 20 percent) would consist of growth stories relatively agnostic to the business cycle, stocks relatively better positioned within their sector and tactical opportunities with favourable risk-reward.
| New Fund Offer (NFO) of HDFC Business Cycle Fund | |
| NFO period | November 11 to 25 |
| Fund manager | Rahul Baijal |
| Scheme plans | Regular & direct |
| Benchmark | Nifty 500 TRI |
Investment strategy
The scheme will invest in businesses likely on the cusp of favourable business upcycle, and avoid businesses about to enter a downcycle, and therefore investments across companies and themes will be rotated based on the stages of business cycles.
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While highlighting the key features of business cycle fund, the AMC — in a statement — says that estimating positioning of various business cycles and their trajectory can be done with higher confidence versus the general economic cycle.
And when businesses are in upcycle, investors get dual benefit of earnings growth and improvement in valuation multiples. The investment horizon of the scheme is three or more years.
This product is suitable for investors who are seeking to generate long-term capital appreciation via investment predominantly in equity and equity-related instruments related to the business cycle theme, and who want to take advantage of having higher exposure to companies at the cusp of higher earnings growth.
