Kotak mutual fund has launched Business Cycle Fund NFO which is open for subscription till Sep 21st, 2022. It is an open-ended equity scheme. It will focus on riding the business cycle through dynamic allocation between different sectors and stocks at various stages of the business cycle in the economy
INVESTMENT OBJECTIVE
The scheme shall seek to generate 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.
However, there is no assurance that the objective of the scheme will be realized.
INVESTMENT STRATEGY
The Fund would follow top-down approach of portfolio construction to identify stages of business cycle, sector opportunities and subsequently using bottom-up approach to identify strong companies within those sectors. The portfolio is therefore likely to be focused on few selected sectors which are likely to do well in a particular business cycle. Subsequently, for identifying companies within those sectors, the portfolio construction will be based on bottom-up stock picking using the Business, Management and Valuation (BMV) model. The Fund Manager will evaluate the business environment that a company operates in, the capability of the management to execute and scale up the business and valuation of the company based on fundamentals like discounted cash flows and PE ratios, etc.
The Scheme would aim to follow the business cycle approach to investing by identifying such economic trends and investing in the sectors and stocks that are likely to outperform at any given stage of the business cycle in the economy. The fund manager will consider various economic parameters (like corporate profit growth trend, GDP growth, Current Account Deficit, fiscal deficit, interest rates, inflation etc.), investment indicators (like investment in capex, capacity utilization, credit growth, etc.), business and consumer sentiment which are leading economic indicators (purchasing manager index, business confidence index, sales of various consumer discretionary products, etc.) to decide on the expansion or contraction phase in addition to other parameters.
BENCHMARK?
The performance of the Scheme is measured against Nifty 500 Total Return Index.
Rationale for adoption of benchmark:
The NIFTY 500 index represents top 500 companies selected based on full market capitalization from the eligible universe. The composition of the aforesaid benchmark is such that, it is most suited for comparing the performance of the scheme.
ASSET ALLOCATION
The asset allocation under the Scheme, under normal circumstances, is as follows:
Investments | Indicative Allocation | Risk Profile |
Equity and Equity Related Securities selected on the basis of business cycle* | 80%-100% | Very High |
Other Equity and Equity Related Securities of companies | 0%-20% | Very High |
Debt and Money Market Securities# | 0%-20% | Low to Moderate |
Units of REITs & InvITs | 0%-10% | Very High |
NFO Issue Details
Scheme Opens | 7th Sep 2022 |
Scheme Closed | 21st Sep 2022 |
Scheme reopens for continuous purchase/sale | Within 5 working days after NFO closed |
Minimum Lumpsum | Rs. 5000/- and in multiples of Re. 1 |
Minimum SIP | Rs. 500/- (Subject to a minimum of 10 SIP installments of Rs. 500/- each) |
NAV of the fund in NFO period | Rs 10 |
Entry Load | Nil |
Exit Load | • For redemption / switch out of up to 10% of the initial investment amount (limit) purchased or switched in within 1 year from the date of allotment: Nil. • If units redeemed or switched out are in excess of the limit within 1 year from the date of allotment: 1% • If units are redeemed or switched out on or after 1 year from the date of allotment: NIL |
Risk | Very high |
Benchmark | The performance of the Scheme is measured against Nifty 500 Total Return Index. |
Fund Manager | Mr. Pankaj Tibrewal for Equity, Mr. Abhishek Bisen for Debt |
Performance of existing Multicap Funds
Here is the performance of some existing business cycle funds. This would give an idea to investors on how these funds have performed in medium to long term. Returns indicated here are annualized returns.
Scheme | 1Year Ret (%) | 3 Year Ret (%) | Click to see latest performance |
L&T Business Cycle Fund | 11.18 | 20.56 | |
ICICI Pru Business Cycle Fund | 10.81 | - | |
TATA Business Cycle Fund | 8.97 | - | |
ABSL Business Cycle Fund | - | - |
Returns as on 07-Sep-2022
Suitability
This product is suitable for investors who are seeking*
Kotak Business Cycle Fund may be suitable for investors who are looking for long-term capital growth through “investment in portfolio of predominantly equity and equity-related securities of companies with a focus on riding business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy.”
However, there is no guarantee that the scheme’s objectives will be met.
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*Investors should consult their financial advisors if in doubt about whether the product is suitable for them
Note: The above information has been sourced from the Scheme Information Document provided by Kotak Asset Management. Read the entire document before investing, Disclaimer: Jaiprakash (ARN/Distributor - 70524; brand name Vasundhra Investment) is the distributor of the mutual fund. Please consult your investment advisor before investing
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.