According to a press release, 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. During an expansion phase it will buy either the sector leaders or companies benefitting disproportionately from the sectoral tailwinds during economic and business cycles. During a contraction phase it will Invest in companies from sectors which provide cushion during downcycles.
The fund house said that compared to other diversified funds, the business cycles theme allows for greater sector concentration in terms of sector over/underweight. The other portfolio parameters like portfolio churn, market cap allocation, number of stocks will be dependent on the stage of the economic cycle.
“The focus has shifted to Business cycles investing because of 2 reasons:
• The 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 atleast 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,” Rahul Singh, CIO – Equities at Tata Asset Management .
