The new fund offer or NFO of the scheme will open for subscription on August 7 and close on August 21.
The investment strategy focuses on generating wealth by investing in companies through dynamic allocation between various sectors and stocks at various stages of the business cycle.
The scheme will be benchmarked against Nifty 500 TRI and managed by Ajay Khandelwal, Niket Shah, Santosh Singh, Atul Mehra, Rakesh Shetty, and Sunil Sawant.
The fund will invest minimum of 80% and maximum of 100% in equity and equity-related instruments selected on the basis of business cycle theme, 0-20% each in equity and equity-related instruments other than business cycle theme and debt and money market instruments (including cash and cash equivalents), respectively. Maximum of 10% in units issued by REITs and InvITs and maximum of 5% in units of mutual funds with provision for risk mitigation.
The scheme is suitable for investors who are seeking capital appreciation over the long term by investing predominantly in equities and equity-related instruments selected on the basis of business cycle. “Indian economy is in an expansion phase which reflects in the improving corporate profitability, credit and CAPEX pick up, and government support to various sectors. This also resulted in improvement in India’s domestic demand and consumption during the past 3 years, which has led to improving business prospects, driving investments in business capacity, and improvement in household assets. With the business cycle strategy, we want to capitalize on this virtuous time for Indian corporates, by selecting businesses that are most likely to do well during this expansion phase,” said Prateek Agrawal, MD and CEO of Motilal Oswal Mutual Fund.The business cycle illustrates the natural ebb and flow of the economy, characterized by alternating periods of growth and decline, as reflected in metrics like real GDP growth and various economic indicators. Each phase of the cycle impacts companies and sectors differently, with distinct opportunities and risks emerging at various stages, said the press release by the fund house.
“Our Business Cycle Fund is strategically designed to capitalize on emerging sectors and themes, allowing early exposure and maximizing the potential for wealth creation from upcoming trends. Utilizing HI-Growth & Hi-Conviction investing, the fund leverages a concentrated allocation of top house ideas across the market spectrum. Its agile approach ensures dynamic investment allocation across all market caps, adapting to evolving opportunities and optimizing returns,” said Niket Shah, CIO, Motilal Oswal Mutual Fund.
He added, “In business cycle investing, strategic positioning during different phases can significantly impact returns. During expansionary phases, such as 2004-07 and 2021-24, sectors like Capital Goods and Realty have outperformed defensive sectors due to increased capex and infrastructure development. Conversely, during slowdowns like 2009-12, FMCG sectors demonstrated resilience as essential consumption remained steady, outshining sectors like Realty. Similarly, in the trough phase of 2013- 20, Consumer Durables surpassed Metals as consumption began to rebound. Understanding these dynamics, wherein market returns are driven by earnings growth and shifts in sentiment, can guide investors in making informed decisions aligned with the business cycle.”