Mutual Fund News : HDFC Mutual Fund Introduces HDFC Business Cycle Fund

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HDFC Mutual Fund has Introduced a new scheme – HDFC Business Cycle Fund

It is an open-ended equity scheme following business cycle based investing theme.

Accordingly, the investment objective 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. However, there is no assurance that the objective of the scheme will be realized.

Under normal circumstances, HDFC Business Cycle Fund will hold an allocation of 80% to 100% of its assets in Equity and Equity related instruments of Business cycle based theme companies, 0% to 20% in Equity and Equity related instruments of companies other than above, 0% to 20% in Debt securities, money market instruments and Fixed Income Derivatives, 0% to 20% in Units of Mutual Fund and 0% to 10% in Units of REITs and InvITs.

As per the Scheme Information Document, while doing portfolio construction, the Scheme would follow a blend of top-down approach to identify stages of business cycles, sector opportunities and bottom-up approach to identify strong companies within those sectors.

The assessment of the stage and likely trajectory of business cycles will be done by the top-down macro trends observed in the sector/business/economy/macro indicators. The fund manager will look at various business specific indicators like the outlook on growth, competition in the market place, pricing power, bargaining power of buyers and suppliers, threat of substitutes in products, consumer sentiment, capacity utilization , capex plans and also macro indicators like domestic economic growth, changes in government regulations, business confidence index, inflation trends, interest rates, geopolitical issues , global growth for exports potential , other external factors.

The bottom-up stock selection investment framework shall follow a rigorous in-house process based on fundamental analysis and research. The fund manager will favor companies that are most attractively valued relative to their quality of management, business model & financial metrics.

HDFC Business Cycle Fund’s performance will be benchmarked against Nifty500 TRI.

The scheme will be managed by Mr Rahul Baijal.

The NFO opens for subscription on November 11, 2022 and closes on November 25, 2022. The scheme will reopen for continuous sale and repurchase within 5 Business Days from the date of allotment.

The fund’s NAV is priced at Rs 10/- per unit during the NFO period. The minimum subscription amount is Rs 100 and in multiples of any amount thereafter.

The scheme offers Regular Plan and Direct Plan each plan offers Growth and Income Distribution cum capital withdrawal option (IDCW) option.

[Read: HDFC Business Cycle Fund: Aiming to Benefit from the Shift in Business Cycle]