Axis Mutual Fund on Monday announced the launch of Axis Business Cycles Fund, which seeks to capture the four primary business cycles: expansion, peak, slow down, and trough, for higher returns.
The new fund offer (NFO) for this open-ended equity scheme will run from February 2-16, 2023. The scheme is managed by Ashish Naik and will track the NIFTY 500 TRI. The minimum subscription amount is Rs 5000, and after that, in multiples of Rs 1.
A business cycle fund taps the demand and supply trends, wherein prices drop when the supply is higher, and when demand rises, prices increase. Such movements are seen across businesses.
In a press release, commenting on the scheme, Chandresh Nigam, managing director (MD) and chief executive officer (CEO) of Axis AMC, said, “If one were to assess India’s growth through a ‘business cycle’ lens, we are currently at an interesting position, between the expansion and peak phase. Multiple drivers are beginning to fall in place for investment cycle pick-up in India.”
Nigam added, “Axis’ unique hybrid investment approach (mix of top-down and bottom-up) follows the quality style of investing and offers no market cap bias to investors.”
Although no one can be sure how long each phase could last, correctly identifying the cycles can bring opportunity. Axis said the goal is to frame a coherent investment opinion after identifying a business cycle. It said indicators that best represent economic health and the investment thesis are considered.
Why A Business Cycles Fund?
The fund house believes things have started to look up in the post-Covid phase. Balance sheets have strengthened across large companies amid strong domestic demand, increased focus on production-linked incentive schemes, and massive digitalisation offering robust economic impetus.
It further notes that if consumption was the primary driver for economic growth in the last decade, investment led by capex and manufacturing could be a growth driver for this decade.
Both B2C (business to consumers) and B2B (business to business) sectors, which are more cyclical, can do well in such an environment.
How The Axis Business Cycles Fund Works
The fund will have a cycle-driven portfolio, focusing on building a cyclical sector-based portfolio of companies that may benefit from an impending favourable upcycle. However, during slowdowns, the portfolio would tilt towards counter-cyclical themes in a better position to navigate challenging times.
Contrary to the bottom-up approach to investing, this fund will employ a hybrid approach. It will use a top-down approach to identify trends and a bottom-up approach to identify stocks that would thrive. In addition, the fund house said it would follow a dynamic path with no market bias.
Key Features Of The Fund
· Axis Business Cycles Fund is an open-ended equity scheme.
· The new fund offer (NFO) will run from February 2-16, 2023.
· The scheme is benchmarked against NIFTY 500 TRI and is managed by Ashish Naik.
· The minimum subscription amount is Rs 5000, and after that, in multiples of Rs 1.
· It will tap the demand and supply trends in the market, four primary business cycles.
· It will follow a hybrid approach or a mix of top-down and bottom-up.
· Will have the flexibility for a more aggressive stance for over or under-weight sectors.
· No market cap bias.
