Tata Mutual Fund launches Tata Business Cycle Fund

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MUMBAI: Tata Mutual Fund on Thursday announced the launch of Tata Business Cycle Fund, an open-ended equity scheme following the business cycles-based investing theme.

The New Fund Offer (NFO) opens on 16 July and will close on 30 July. Tata Business Cycles Fund aims to deploy the business cycle approach to identify economic trends and invest in sectors and stocks that are likely to outperform, a release issued by the mutual fund house said.

During an expansion phase, it will buy either the sector leaders or companies benefitting disproportionately from sectoral tailwinds. During a contraction phase, it will invest in companies from sectors which provide a cushion during down-cycles, the release added. The scheme will be benchmarked to the Nifty 500 Total Returns Index (TRI) and will be managed by Rahul Singh, chief investment officer, Equities, and Murthy Nagarajan, head of fixed income at Tata Mutual Fund on the debt side.

For overseas allocation, it will be managed by Venkat Samala. The scheme is allowed to invest up to 20% of its corpus outside India.

Speaking on the launch, Rahul Singh said, “The focus has shifted to business cycles investing because of two reasons. Business cycles have become shorter. Cycles which earlier lasted 4-5 years have now shortened to 1-2 years. Over the last few years, the impact of top-down sector allocations has been on alpha generation which has been very high. This fund would invest in businesses on a macro basis, with at least 80% of the portfolio invested as per business cycles theme. We believe cycles have become shorter and a portfolio needs to adapt quickly to the changing environment. Hence, the need to have Tata Business Cycle Fund in your portfolio.”

Compared to other diversified funds, the business cycles theme allows greater sector concentration in terms of sector over/underweight. Other parameters like portfolio churn, market cap allocation, number of stocks will be dependent on stage of the economic cycle, the release from Tata Mutual Fund added.

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