Motilal Oswal Business Cycle Fund: There is an opportunity to invest in Motilal Oswal Asset Management Company’s (MOAMC) New Fund Offer (NFO) Motilal Oswal Business Cycle Fund till August 21. This NFO opened on August 7, 2024. This new thematic fund is an open-ended equity scheme that follows a business cycle-based investment theme. Its investment strategy is to increase wealth in the long term by investing in companies through dynamic allocation between different sectors and stocks in different phases of the business cycle. While the benchmark is Nifty 500 TRI.
Motilal Oswal Business Cycle Fund: Investment Strategy
This fund (New Fund Offer) will invest at least 80% and maximum 100% in equity and equity related options selected based on the business cycle theme. At the same time, 20% allocation will be in equity and equity related options related to the business cycle theme, apart from other equity or equity related options, debt and money market. This also includes cash. At the same time, a maximum of 10% allocation can also be made in units issued by REITs and InvITs. At the same time, a maximum of 5% can be allocated to the units of mutual funds with the provision of risk mitigation.
For whom is the option better
This NFO is a better option for those investors who want to increase their wealth in the long term by investing primarily in equity and equity-related options chosen based on the business cycle. For those investors who understand the fluctuations in the stock market and have the ability to bear the risk associated with it, these funds are a better option for them. Business cycle funds have both lump sum and SIP investment options.
Business Cycle Funds can invest in stocks of companies from all sectors and with all market caps. The stocks of good companies from sectors that are expected to perform well as per the business cycle are included in the portfolio of such funds. Generally, based on a specific selection process, sectors are first selected according to the business cycle and then financially strong companies from those sectors are selected. The portfolio of a Business Cycle Fund can have defensive and non-defensive sectors. Defensive sectors are pharmaceutical, FMCG, IT and telecom and these sectors can perform stably even during economic recession. On the other hand, non-defensive sectors include sectors like financial, infrastructure, automobile, cement, which perform better during the boom in the economy.
Selection of a better business theme
Prateek Agarwal, MD & CEO, Motilal Oswal Asset Management Company, says that the Indian economy is in an expansion phase, driven by improved corporate profitability, increased credit and capex, and government support to several sectors. As a result, India’s domestic demand and consumption have also improved during the last 3 years, leading to improved business prospects, increased investment in business capacity and improved household assets. With a business cycle strategy, we want to take advantage of these good times by selecting businesses that are most likely to perform well during this expansion phase.
Returns change in different phases
Niket Shah, CIO, Motilal Oswal Mutual Fund said that our Business Cycle Fund is strategically designed to capitalize on emerging sectors and themes, allowing early exposure and maximizing the wealth creation potential from upcoming trends. Using high-growth and high-conviction investments, the fund leverages a concentrated allocation of top house ideas across the market spectrum. In business cycle investing, strategic positioning during different phases can have a significant impact on returns.
