investment The prevalence of business cycle linked mutual funds is increasing in the scenario. Last year, these mutual funds have given strong returns of 32-56 percent. During this period, investors from the schemes of HSBC, Mahindra Manulife and Quant have received returns of more than 50 percent. Business cycle funds are a type of mutual fund that invest during different stages of the economic cycle in stocks and sectors that are expected to perform well based on the conditions at that time.
Increasing interest of investors
According to industry data, these top three funds have significantly outperformed the Nifty 500 TRI index, which returned 35.11 per cent in the same period. Firoz Aziz, Deputy Chief Executive Officer (CEO), Anand Rathi Wealth, said this impressive growth reflects the growing interest of investors in these funds. Currently, there are only 16 business cycle related funds in the market, of which only three have completed a three-year tenure. The assets under management (AUM) of this category have more than doubled to Rs 37,487 crore from Rs 17,238 crore as of September, 2021. Such funds try to identify economic cycles and then select stocks from sectors that may perform well in the respective market conditions.
Gave an average return of 42 percent
These funds move their investments across different sectors depending on different conditions like recession or early recovery of the economy. For example, in recessionary periods, defensive sectors like utilities and pharmaceuticals perform well. In contrast, sectors like auto, financial and infrastructure see gains in the early recovery phase. Of the 16 such funds currently available, 10 mutual funds have a track record of more than one year and all but one have outperformed the Nifty 500 TRI in the last 12 months. According to industry data, these 10 funds have given an average return of 42 percent.
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