There is an atmosphere of sluggishness in the stock exchange these days. Some days the index (BSE Sensex, Nifty50) rises and some days it falls. On the last trading day of this week, that is, on Thursday also, BSE Sensex had closed down by 359 points. Even before that there was chaos in the market.
The stock markets remained closed on Monday this week on the occasion of Ram Mandir Pran Pratishtha. After that, there was a massive beating of shares in the market on Tuesday. However, this decline stopped on Wednesday and the Sensex closed with a gain of 689 points. Common investors get scared of these fluctuations. Therefore they go to the shelter of Bank FD. Let us tell you about a mutual fund which doubled the investors’ money in just three years, that too with complete security.
ICICI Pru Business Cycle Fund
Today we are talking about ICICI Prudential Business Cycle Fund. This fund was one of the earliest offers based on this theme. Its fund managers are Anish Tawakle, Lalit Kumar and Manish Banthia. In his three-year track record, he has taken many sectoral decisions, which have worked very well for the fund. The fund also has the facility to invest in foreign securities.
Double the amount in three years
If an investor had invested Rs 1 lakh at the time of launch of this fund (January 18, 2021), then by January 01, 2024, the value of that investment would have become Rs 1.93 lakh. That means it shows a CAGR return of 24.96%. The same investment in the scheme’s benchmark yielded Rs 1.66 lakh i.e. a CAGR return of only 12.59%. Talking about SIP, a monthly investment of Rs 10,000 from the beginning will be a total investment of Rs 3.60 lakh. By January 1, 2024, the value of that investment would have increased to Rs 5.23 lakh, meaning it is giving a CAGR return of 26.84%. The same investment in the benchmark has given a CAGR return of 20.96 percent in the same period. In the context of last one year, this fund has given returns of 32.86% compared to its benchmark 27%. The average category return for the same period has been 29.64%.
Where investments are made
About 54% of the fund’s portfolio consists of the domestic sector. Because, this fund wants to take advantage of the strong economic activity going on at the moment. In keeping with this theme, banks, auto, construction and telecom form a significant part of the portfolio. Business cycle funds invest in defensive sectors like pharma and IT due to better valuations in the portfolio which helps in mitigating any risks or its impact due to geopolitical tensions or slowdown in global growth. About 4% is invested in expensive valuations and foreign securities across various market capitalisations.
Boom and recession in business cycle
Generally, a business cycle includes all phases of growth, recession and recovery. Each phase affects a particular sector. In the growth phase, companies make expansion plans and there are a lot of job opportunities in this phase. Consumers spend money on utility items. In contrast, in a recession phase both consumers and businesses become nervous, leading to delayed spending, closed factories, cost cutting, and layoffs. ICICI Prudential Business Cycle Fund is an equity oriented offering in which the fund invests in companies based on different stages of the economic cycle. This concept is known as business cycle based investing. In such funds, the fund manager decides on allocation across sectors and stocks to make the most of the opportunities arising from a particular phase of the economic cycle.
(Disclaimer: Mutual fund investments are subject to market risks. Read all scheme related documents carefully before investing in it.)
