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Baroda Mutual Fund launches a new thematic fundBaroda Business Cycle Fund, which aims to deliver returns every season.

The New Fund Offer (NFO) period for the Baroda Business Cycle Fund is from 24th August 2021 to 06th September 2021. The scheme re-opens in 5 business days from the date of allotment.

Objective

The fund’s primary objective is to generate long-term capital appreciation by predominantly investing in equities with a focus on riding business cycles. To achieve this, they aim at dynamic asset allocation between stocks and sectors at different stages of the business cycle in the economy. However, the scheme doesn’t assure that the primary objective will be realized.

Baroda Business Cycle Fund New Fund Offer Details

Baroda Business Cycle FundDetails
NFO Opening Date24th August 2021
NFO Closing Date06th September 2021
Re-Open DateFive business days from the date of allotment
Type of FundOpen-ended equity scheme, Sectoral/Thematic
Minimum Investment AmountINR 5,000
Minimum Additional Purchase AmountINR 1,000
Exit Load0 -1%
SuitabilityVery High
BenchmarkBSE 500 TRI
Plans and OptionsRegular Plan & Direct Plan
Fund ManagerSanjay Chawla (Chief Investment Officer)
Abul Fateh (Sr. Equity Analyst)
Pratish Krishnan (Dedicated fund manager for overseas investments)

Asset allocation

The Baroda Business Cycle Fund follows the top-down approach to asset allocation. The fund managers focus on macro indicators to identify sectors. They use a windshield approach by using forward indicators rather than relying on historical data. The fund is flexible in its investment approach and invests in sectors that are in their recovery phase. Following is the indicative asset allocation of the fund.

Types of InstrumentsIndicative Allocation MinimumIndicative Allocation MaximumRisk Profile
Equity and Equity Related Instruments80%100%High
Other Equity and Equity Related Instruments (includes derivatives to the extent of 50% of the assets of the scheme)0%20%Low to Medium
Overseas equity and equity-related instruments, including ADR, GDR, or any other type of securities0%20%High
Debt and Money Market Instruments including debt mutual funds (investment in securitization will not exceed 10% of the assets of the scheme)0%100%Low to Medium
Units issued by REITs and InvITs010%Medium to High

The fund strongly supports business cycle investing and believes that there will be a strong customer demand as the economy recovers. GDP growth rate will be improving, and a low-interest rate scenario will drive the investors towards equity. Moreover, there will be increased capacity utilization and Capex revival. The fund is based on lead indicators and hence believes it will have the first-mover advantage in identifying opportunities.

Fund Manager

Mr Sanjay Chawla

Mr Chawla is the Chief Investment Officer at Baroda Mutual Fund. He has over 30 years of experience in equity research, fund management, and management consultancy. Prior to joining Baroda Mutual Fund, he worked with Birla SunLife AMC, SBI Capital Market, and Motilal Oswal Securities. He also worked with IDBI Capital Markets, SMIFS Securities, and IIT Invest Trust & Lloyds Securities. He holds an MMS degree from BITS, Pilani.

Mr Abul Fateh

Mr Fateh is the Senior Equity Analyst and Fund Manager at Baroda Mutual Fund. He has over 15 years of experience in equity analysis. Prior to working with the fund house, he worked with Greece Investments, Baroda Pioneer AMC, L&T Mutual Fund, and Parag Parikh Financial Services. He has done his M.Sc. in Mathematics and holds a PG Diploma in Securities Markets.

Mr Pratish Krishnan

Mr Krishnan is the Fund Manager and Senior Analyst with over 15 years of experience in equity research. For the Baroda Business Cycle Fund, he is the dedicated fund manager for overseas investments. Prior to working with Baroda Mutual Fund, he worked with Antique Finance and Bank of America Merrill Lynch as a sell-side analyst. He holds a BCom degree and an MMS in Finance.

Who Can Invest?

The Baroda Business Cycle Fund aims to benefit from the business cycles by dynamically allocating assets between sectors. Hence investors aiming to take advantage of this strategic positioning of assets can invest in this fund. The fund invests in stocks and sectors that are in their recovery phase in the business cycle to achieve higher returns. So, investors aiming to get good returns by investing in stocks in their recovery phase can consider investing in this.

Moreover, investors aiming for diversifying their portfolios with a different style of investing can also invest in the Baroda Business Cycle Fund. The fund ultimately aims to create wealth through its strategy in the long term. Hence investors looking for high alpha with risk-adjusted returns with a minimum investment horizon of 5 years can invest in this fund.

Concluding Remarks

Baroda Business Cycle Fund is an open-ended equity fund that invests in capitalizing on economic trends. The various lead indicators will help in identifying and understanding an economic trend. The fund believes in cashing out the opportunities and rewards in each business cycle phase, namely Recovery, Growth, Expansion and Contraction.

They dynamically invest their assets across sectors and stocks based on their business cycle phase. The fund counts on the fact that though the recovery is relatively slow, the domestic economy is showing recovery signs. It believes in grabbing the emerging opportunities and capitalizing on this during the recovery phase.

The fund follows a theme of business cycles and hence requires investors to have a high understanding of risk. Moreover, investors should aim at long term wealth creation with this fund and stay invested for a minimum of 5 years. The fund doesn’t guarantee any returns. Hence, it is better if investors seek experts to advise and continuously monitor their investments in the light of their investment goals.

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