Mahindra Manulife Mutual Fund announced the launch of the Mahindra Manulife Business Cycle Fund, an open-ended sectoral or thematic fund scheme that seeks to generate long-term capital appreciation by investing with a focus on riding business cycles through allocation between sectors and stocks at different stages of business cycles.
The scheme opened for public subscription on August 21, 2023, and will close on September 04, 2023. The scheme re-opens for continuous sale and repurchase from September 13, 2023.
Q. What kind of mutual fund scheme is this?
This is an open-ended
- Long-term capital appreciation
- Investment predominantly in equity and equity-related instruments of business cycle-based theme
Anthony Heredia, MD & CEO, Mahindra Manulife Mutual Fund, highlighted the significance of this offering, stating, “Through a judicious alignment of economic shifts and market dynamics, we provide investors with an opportunity to add a long-term tactical play to their core fund portfolios. This fund complements our existing product portfolio and is well suited to both one-time as well as SIP investments.”
Q. What is the main objective of investing in this fund?
The scheme shall seek to generate long-term capital appreciation by investing predominantly in equity and equity-related securities with a focus on identifying and investing in business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy. However, there is no assurance that the objective of the scheme will be realized.
Krishna Sanghavi, Chief Investment Officer – Equity, Mahindra Manulife Mutual Fund emphasized, “The fund strategically aims to integrate the economic cycle and market cycle with a view to construct a portfolio based on sectoral preferences depending upon stages of business cycles, in order to generate long-term capital appreciation. At Mahindra Manulife, we believe our new offering Mahindra Manulife Business Cycle Fund is tailored to seize opportunities across market capitalization in equity markets using a blend of top-down Business Cycle/Sector identification and bottom-up stock selection approach.”
The investment approach of Mahindra Manulife Business Cycle Fund amalgamates top-down and bottom-up methodologies, providing a comprehensive strategy. This process shall commence with a thorough identification of the prevailing business cycle and sectoral trends, providing a robust framework for portfolio allocation.
Q. How may one invest in this scheme?
Investors can invest under the scheme with a minimum investment of ₹1000 per plan/option and in multiples of Re 1. There is no upper limit for investment.
Under normal circumstances, the asset allocation of the scheme will be as follows:
| Instruments | Indicative Allocation (% of assets) | Risk Profile | |
Minimum | Maximum | High/Moderate/Low | |
Equity and Equity related instruments of companies selected based on the business cycle theme | 80 | 100 | Very High |
Equity and Equity related instruments of companies other than above | 0 | 20 | Very High |
Debt and Money Market Securities (including TREPS (Tri-Party Repo) and Reverse Repo in Government Securities) | 0 | 20 | Low to Moderate |
Units issued by REITs & InvITs | 0 | 10 | Very High |
Q. Are there similar mutual funds in the market?
To date, many asset management companies (AMCs) have launched such business cycle funds, thus, allowing inclined investors to avail of returns corresponding to the total returns of the securities in this particular index. These include:
Mutual Fund House | Name of the Fund |
HSBC Mutual Fund | HSBC Business Cycle Fund |
HDFC Mutual Fund | HDFC Business Cycle Fund |
ICICI Prudential Mutual Fund | ICICI Prudential Business Cycle Fund |
Axis Mutual Fund | Axis Business Cycles Fund |
Kotak Mahindra Mutual Fund | Kotak Business Cycle Fund |
TATA Mutual Fund | Tata Business Cycle Fund |
Baroda BNP Paribas Mutual Fund | Baroda BNP Paribas Business Cycle Fund |
| Source: MoneyControl | |
Q. How will the scheme benchmark its performance?
The performance of the scheme will be benchmarked against the NIFTY 500 TRI. The scheme is an open-ended equity scheme following a business cycles-based investing theme.
Q. Are there any entry or exit loads to this scheme?
This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” would also be calculated as under:
- An “Exit Load” of 1% is payable if units are redeemed/switched out up to three months from the date of allotment
- Nil if units are redeemed/switched out after three months from the date of allotment.
Q. Who will manage this scheme?
Krishna Sanghavi, Renjith Sivaram Radhakrishnan, and Kush Sonigara are the designated fund managers of this scheme.
Q. Does the fund contain any inherent risk?
The scheme involves “High Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to understand that their principal will be subject to high risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.
