Mutual Fund News : Aditya Birla Sun Life Mutual Fund Introduces Aditya Birla Sun Life Business Cycle Fund

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Aditya Birla Sun Life Mutual Fund has launched an open-ended equity scheme – Aditya Birla Sun Life Business Cycle Fund.

The scheme will follow business cycles-based investing theme.

The investment objective of the scheme is to provide long term capital appreciation by investing predominantly in equity and equity related securities with a focus on riding business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy.

The Scheme does not guarantee/indicate any returns. There can be no assurance that the objective of the Scheme will be achieved.

Under normal circumstances, 80% to 100% of the funds portfolio will be invested in Equity & Equity related instruments selected on the basis of business cycle. The Scheme will invest 0% to 20% of its assets in other Equity & Equity Related Instruments. Whereas upto 20% of its assets can be invested in Debt and Money Market instruments. The Scheme may also invest 0% to 10% of its net assets in Units issued by REITs and InVITs.

The investment strategy of Aditya Birla Sun Life Business Cycle Fund as mentioned in the Scheme Information Document (SID) is as follows,

Aditya Birla Sun Life Business Cycle Fund will invest in Indian equity and equity related securities with focus on riding business cycles through dynamic allocation between sectors and stocks at different stages of business cycles in the economy.

The Fund would follow top-down approach of portfolio construction to identify stage of business cycle, sector opportunities and subsequently using bottom-up approach identify strong companies within those sectors.

The Scheme would aim to deploy the business cycle approach in investing by identifying economic trends and investing in the sectors and stocks that are likely to outperform at any given stage of business cycle.

The fund manager will consider economic parameters (like Current Account Deficit, fiscal deficit, interest rates, inflation), investment indicators (like investment in capex, new projects cleared, etc.), business and consumer sentiment (purchasing manager index, business confidence index, sales of various consumer discretionary products, etc.) to decide on the expansion or contraction phase. For instance, during the early expansion phase, cyclical stocks tend to outperform. In the contraction period, the defensive groups or sectors that are less sensitive to changes in overall economic activity like healthcare, consumer staples, etc. outperform because of their stable cash flows and dividend yields.

The Scheme would adopt top-down approach of investing and will aim at being diversified across various industries and / or sectors and/ or market capitalization. The selection of sectors at the primary level will be based on the stage of the domestic economic cycle. The fund managers could use various indicators such as corporate profit growth trends, inventory levels, credit growth, capacity utilization levels and other relevant factors to determine the stage of the economic cycle. Based on the views formed on the stage of the economic cycle, the fund managers would look to own sectors and subsequent stocks that they expect to outperform over the next few years.

The stock selection of the scheme would emphasize on identifying companies with sound corporate managements and prospects of good future growth. The fund managers will favour companies that offer the best value relative to their respective long-term growth prospects, returns on capital and management quality. When assessing a company, the fund managers will focus on understanding how each of these factors will change over time. Essentially, the focus would be on stocks driven by long-term fundamentals. However, short term opportunities would also be seized, provided underlying values supports these opportunities. A portion of the scheme will also be invested in IPOs, emerging sectors, concept stocks and other primary market offerings that meet our investment criteria.

Aditya Birla Sun Life Business Cycle Fund’s performance will be benchmarked against S&P BSE 500 TRI (Total Return Index).

The fund will be managed by Mr Vineet Maloo and Mr. Nitesh Jain, and Mr. Vinod Bhat (overseas).

The NFO opens for subscription on November 15, 2021, and closes on November 29, 2021. The scheme will reopen for continuous sale and repurchase within 5 business days from date of allotment.

The fund’s NAV is priced at Rs 10/- per unit during the NFO period. The minimum subscription amount is Rs 500/- and in multiples of Re 1 thereafter.

The fund offers Regular Plan and Direct Plan having Growth Option and Payout of Income Distribution cum Capital Withdrawal Option (Re-investment and Pay-out facility).