IGI Logo

Mumbai, July 15, 2021 :  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, 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.

To Read Complete Report & Disclaimer Click Here

Above views are of the author and not of the website kindly read disclaimer