NFO in Focus: Tata Business Cycle

While you may continue to follow guidelines for sound health, it is time we look at investment strategies that will help your investments make the most of the recovery & imminently successful economics.

Well, Tata MF has rolled out a new “Tata Business Cycle Fund” to align your portfolio’s growth with that of the newest fastest-growing economy in India. The fund will open for subscription from 16th July 2021 till 30th July 2021, though it is an open-ended fund.

Should you invest in it?

What is it about?

Tata business cycle fund is a thematic fund that is going to invest in sync with the economic cycles. As the name suggests, the fund is going to identify the economic trends and invest in sectors and stocks that are likely to outperform across cycles. The stock-picking approach will be purely top-down.

It is this cyclicality that presents lucrative investment avenues from a top-down approach based on a strong macro environment. Direct beneficiaries of broad-based growth are set to be equities. Hence, as India looks to become the global engine of growth with supportive external & internal environments, the Tata Business Cycle NFO launches at an opportune moment with the intent of maximizing upside potential.

Things that may work?

Tata mutual fund is typically good at reading the macros & introduce them into the fund management. Fund house has shown the expertise by launching tata infrastructure in the year 2004, when the economy just started recovering, launched digital & consumption fund at the end of the year 2015, during the expansionary phase. All of them turned out to be the consistent wealth creators for the investors.

Understanding of macro environment is crucial for this fund as most of the portion of the portfolio is heavily concentrated towards sectors that are going to benefit from the economic recovery.

Although the fund will have Nifty 500 as the benchmark, it would be sector & market agnostic. This approach may have its own positives and negative and hence macro reading will be crucial for the fund’s performance.

Things that may not work?

The fund carries a high risk as it is more sensitive to economic cycles. Reading of macro indicators & picking good sectors would require many factors to well. Any lag in the economic recovery will lead to more volatility in the portfolio.

When it comes to product differentiation, tata business cycle doesn’t offer much differentiation than the existing business cycles thematic schemes & other flexicap schemes available in the market.

Performance other business cycle funds:

Asset Allocation & Risk Profile:

Fisdom Takeaways:

First time investors in mutual funds can avoid this NFO. It is better suited for long term equity investors with high-risk appetite and an investment horizon of 5 years and above.

Key Features about the fund are as follows: