Business Cycle Funds identify economic trends and pick sectors and stocks which are likely to outperform from these changing trends. Business Cycles are defined based on periods of expansion and contraction. Business Cycle Fund Managers follow a top-down approach where they identify sectors which may see a turnaround soon. Fundamentally-solid stocks are then picked from these sectors. The performance of Business Cycle Funds depends on the fund managers skills and track record. However, business cycle funds are a risky investment for first time equity investors and are suitable only for high risk tolerance investors. Business Cycle Funds could be a part of your satellite portfolio.
#TATA #HDFC #SIP
~HT.98~PR.147~ED.148~
#TATA #HDFC #SIP
~HT.98~PR.147~ED.148~
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NewsTranscript
00:00 Mutual funds, which invest investors' money in the stock market, are known as equity funds.
00:07 But not all equity funds are the same.
00:10 The type of shares these funds invest in and the strategy of their investment can be divided into different categories.
00:19 The cycle of fast and slow is going on in the economy.
00:22 There are different stages in the economy and there is a different business cycle at each stage.
00:28 There are different sectors in the industry, such as banking, pharmaceuticals, FMCG, IT, etc.
00:36 And there are many companies in each sector.
00:38 There is a unique opportunity for investment in each business cycle.
00:42 If the portfolio of the shares associated with the sector is made in accordance with the business cycle,
00:49 then a better profit can be expected.
00:52 Business cycle fund is a kind of thematic fund.
00:56 Thematic fund means a portfolio of the selected sector, which is somehow connected to each other.
01:03 For example, if we talk about an infrastructure theme, then sectors such as power, cement, telecom, etc. will be included.
01:11 This is not the case in the business cycle fund.
01:13 Here, according to the business cycle, changes can be made in the sector.
01:17 That is, business cycle funds are different in many ways from other thematic funds.
01:22 The investment of a business cycle fund can be in all kinds of sectors and all kinds of market cap stocks.
01:31 From the perspective of risk, the thematic fund can be placed between a sectoral fund and a diversified fund.
01:38 Where a sectoral fund invests in the shares of the same sector,
01:42 there is an opportunity to invest in all sectors of the company in a diversified fund.
01:48 In a diversified fund portfolio, all kinds of sectors can be included in every business cycle.
01:54 On the other hand, in a business cycle fund, the rotation of sectors continues.
01:58 According to the business cycle, the sectors from which a good performance is expected,
02:02 those sectors can be included in the portfolio of such funds.
02:07 Based on a special process of common peace, first the sector chosen according to the business cycle is done.
02:13 And then strong companies are chosen economically for those sectors.
02:17 In the portfolio of a business cycle fund, there can be defensive and non-defensive sectors.
02:23 Defensive sectors such as pharmaceuticals, FMCG, IT and telecom are very stable.
02:30 And these sectors perform well even in the era of economic downturn.
02:34 But non-defensive sectors such as financial, infrastructure, automobile, cement etc.
02:42 perform better in the era of economic boom.
02:45 The performance of the stock market depends on the business cycle to a large extent.
02:49 And because a business cycle fund has a sector rotation,
02:53 the funds of this sector have the ability to perform well in all circumstances.
02:58 There are four stages in a business cycle.
03:00 Expansion, peak, contraction, slump, and slump.
03:07 It has often been seen that the performance of some shares also changes due to the change of the business cycle.
03:13 In this case, if the investment portfolio is in the form of a business cycle,
03:17 then better returns can be expected.
03:20 Investors who understand the slump in the share market and have the ability to bear the related risks,
03:27 can invest in such funds for 5 years or more and expect good profits.
03:34 A free and SIP can be invested in the business cycle fund.
03:41 But when the market is at its peak, it is better to invest through SIP.
03:50 In this category, ICICI, Prudential Business Cycle Fund, Tata Business Cycle Fund, etc. are some of the selected funds.
03:59 And now, from 15 November, Aditya Birla Sun Life's new fund offer, i.e. NFO, is open.
04:06 Which will remain open till 29 November.
04:09 This is an open-ended fund, so even after the NFO closes, this fund will remain available for purchase and sale.
04:16 That's all for this video. Like and share the video.
04:19 Also, don't forget to subscribe to the channel.
04:22 (gentle music)