Tata Mutual Fund announced the launch of Tata Business Cycle Fund – an open-ended Equity Scheme following business cycles based investing theme. The New Fund Offer (NFO) opens on July 16, 2021 and will close on July 30, 2021.
The economy goes through a series of stages as it expands and contracts, characterised by downward or upward fluctuations of GDP. Macro events like Covid have also impacted the current business cycle. The returns investors achieve on their investments are driven in large part by changes in the business cycle. Each phase in the business cycle presents unique investment opportunities. So, incorporating business cycles theme into investments helps make the most of the current economic environment.
During a phase of recovery and expansion, investments that are more sensitive to faster economic growth and business activities are likely to outperform. They are generally referred to as cyclical stocks. These include stocks of discretionary consumption, industrials and banks and has a fair bit of contribution from mid & small cap companies.
During a phase of slowdown and recession, defensive and structural growth investments and those that benefit from falling interest rates have greater potential to outperform. They are generally referred to as defensive stocks. These include companies that experience steady consumer demand even during economic slowdowns and are typically dominated by large caps.
Speaking on the launch, Rahul Singh, CIO – Equities at Tata Asset Management said that, “The focus has shifted to Business cycles investing because of 2 reasons:
• The Business cycles have become shorter. Cycles which earlier lasted 4-5 years have now shortened to 1-2 years.
• Over the last few years, the impact of top-down sector allocations has been on alpha generation which has been very high
This fund would invest in businesses on a macro basis, with atleast 80% of the portfolio invested as per Business Cycles theme. We believe cycles have become shorter and a portfolio needs to adapt quickly to the changing environment. Hence, the need to have “Tata Business Cycle Fund” in your portfolio.”
Tata Business Cycles Fund aims to deploy the business cycle approach to investing to identify economic trends and invest in sectors and stocks that are likely to outperform.
• During an expansion phase it will Buy either the sector leaders or Companies benefitting disproportionately from the sectoral tailwinds during economic & business cycles
• During a contraction phase it will Invest in companies from sectors which provide cushion during downcycles
Compared to other diversified funds, The business cycles theme allows for more greater sector concentration in terms of sector over/underweight. The other portfolio parameters like portfolio churn, market cap allocation, number of stocks will be dependent on stage of the economic cycle.
Fund Details
Scheme Name TATA BUSINESS CYCLE FUND
NFO Date NFO Opens: 16th July 2021
NFO Closes: 30th July 2021
Investment Objective To generate long-term capital appreciation by investing with focus on riding business cycles through allocation between sectors and
stocks at different stages of business cycles.
However, there is no assurance or guarantee that the investment objective of the Scheme will be achieved. The scheme does not assure or guarantee any returns.
Type of Scheme An open-ended equity scheme following business cycles based investing theme.
Fund Manager Rahul Singh, Venkat Samala (Overseas Investment) and Murthy Nagarajan (Debt Portfolio)
Benchmark Nifty 500 TRI
Min. Investment Amount Minimum subscription amount: Rs 5,000/- and in multiple of Re.1/- thereafter.
Additional Purchase: Rs.1000/-& in multiples of Re.1/-threafter.
Load Structure En` try Load:N.A.
Exit Load: Redemption/Switch-out/SWP/STP on or before expiry
of 365 days from the date of allotment: If the withdrawal amount
or switched out amount is not more than 12% of the original cost of
investment-NIL
Redemption/Switch-out/SWP/STP on or before expiry of 365 days
from the date of allotment: If the withdrawal amount or switched
out amount is more than 12% of the original cost of investment-1%
of applicable NAV
Redemption/Switch-out/SWP/STP after expiry of 365 days from
the date of allotment-NIL
About Tata Asset Management
Established in 1994, Tata Asset Management Ltd is the investment manager for Tata Mutual Fund. It is one of the oldest mutual funds in India from one of India’s most Trusted business house, with an investor base of over 21,00,000. Tata Mutual Fund takes pride in managing the investments of the common man right from childhood to retirement. It offers a wide choice of funds for every need across the entire risk return spectrum. These include equity funds, hybrid funds and fixed income funds.
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