Although it sounds innocuous, the name itself refers to the art, or science, of investing in stocks that are starting to rise from a trough.
“The past decade has been characterized by accommodative monetary policy and interest rate cuts, leading to lower volatility. This has been positive for equities as an asset class. However, the next decade sees limited room for rate cuts. and global equity valuations are rising,'' said Anish Tawakary, deputy CIO, ICICI Prudential Mutual Fund.
Tawakary believes this is a time when market volatility is likely to be greater than ever. In times like these, the best strategy is to be agile as the macro environment can change, and it is essential to invest in schemes that can move quickly between themes, which is why cyclical funds are inherently It's a role.
agencyFinancial planners believe that catching cycles early can yield big benefits. “As the income of one sector becomes the expenditure of another sector, the economy creates leading and trailing sectors in terms of timing. Participation in the profit pool between sectors therefore shifts.” Mahindra Manulife Mutual Fund Krishna Sanghavi, CIO (Equities), said: Sanghvi believes cyclical funds aim to capture movements in this profit pool across sectors by integrating valuations and market cycles. This leads to higher profits for those who perform the cycle correctly. With this opportunity, we received three new fund offers from fund houses last year, taking the number of such schemes to 11. The average return for this category over the past year was 43%, compared to 29.06% for Nifty, with an alpha of 14 percentage points. Fund managers were quick to sense changes in the capex cycle and added stocks in capital goods, infrastructure, power and PSU banks that benefited from such changes to their portfolios, which worked out well for investors. Financial planners recommend business cycle funds. Satellite allocation in an investor's portfolio to generate alpha. “Such schemes give managers an opportunity to participate in themes that are part of the current cycle,” said Nirav Karkera, director (research) at Fisdom.
“Alpha is generated because fund managers can rotate sectors and stocks based on the opportunities available in the market, which helps in alpha generation,” said Vineet Nanda, founder of SIFT Capital. Nanda believes that most of these schemes are managed by senior officials of fund houses and therefore deserve satellite allocation.
