There are 10 schemes in the category. Five schemes have completed one year on the market. Four of the schemes are relatively new, with one scheme starting to take subscriptions next week.
HSBC Business Cycle Fund, the oldest scheme in this category, has offered around 16.84% in one year. Aditya Birla Sun Life Business Cycle Fund's one-year return was his lowest at 9.45%.
With the exception of Aditya Birla Sun Life Business Cycle Fund, most of the schemes have managed to deliver double-digit returns so far this year. The scheme has offered 6.65% so far this year. HSBC Business Cycles Fund had the highest return of around 15.72 per cent followed by ICICI Prudential Business Cycle Fund with year-to-date returns of 14.12 per cent. The average return for this category year to date was 11.76%.
HSBC Business Cycles Fund is the oldest scheme in this category, having completed nine years of existence. The scheme has offered 12.09% since its inception.
Cyclical funds follow different cycles of the economy and apply exposure to different sectors that are expected to perform well based on the economy. Exposures are based on various real economic indicators and factors such as GDP, inflation, interest rates, fiscal deficits, capital investment cycles, and government policies and regulations. These funds are less risky than regular sectoral or thematic schemes as they focus on multiple sectors rather than a specific sector.
Thematic or sectoral schemes invest a large portion of the corpus in a particular sector and the performance of the scheme is based on the performance of that sector. Therefore, thematic or sectoral funds are only recommended for investors with sufficient knowledge of the sector.
You should only invest in these schemes if you have a long investment horizon or have in-depth knowledge of the sector to time your entry and exit from these schemes. Remember that any field or topic can become obsolete depending on economic conditions. You should not make hasty decisions at those stages.
