Axis Business Cycle Fund – NFO Details and Review

Axis Mutual Funds has launched Business Cycle Fund NFO which would open for subscription on 2nd February, 2023. It focuses on riding business cycle through dynamic allocation between various sectors and stocks at different stages of the business cycle in the economy. Should you invest in Axis Business Cycle Fund NFO? What are the various risk factors associated with such funds? Let me provide a complete review and analysis in this article.

Also Read: Which mutual funds can make you Crorepati in 10 years?

What is Business Cycles Investing?

Business cycle investing is now something new. While equity funds already have this approach, business cycle funds specifically follow this approach, which goes into the phase of Expansion, Recession, Slump and recovery.

Axis Business Cycle Fund - NFO Details and Review

This fund would follow the below approach for investing.

Axis business cycle fund - approach

Axis Business Cycle Fund – NFO Issue Details

Here are the issue details of this NFO.

Scheme Opens 02-Feb-23
Scheme Closes 16-Feb-23
Scheme reopens for continuous purchase/sale Within 5 working days
Minimum Lumpsum Rs 5,000
Minimum SIP Rs 1,000 for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load Redemption within 12 month up to 10% of investment  -1 %, else nil
Redemption beyond 12 months of investment- Nil
Risk Very High Risk
Benchmark Nifty 500 TRI
Fund Manager Mr. Ashish Naik
Max TER 2.25%

Axis Business Cycle Fund SID

What is the investment objective of this MF scheme?

To provide long term capital appreciation by investing predominantly in equity and equity related securities with a focus on riding business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy

There is no assurance or guarantee that the investment objective of the scheme will be realized.

What is the allocation pattern in this mutual fund?

This fund investment pattern is as follows:

Type of instruments Min % Max % Risk Profile
Equity & Equity related instruments selected on the basis of business cycles 80% 100% Very high
Other Equity & Equity Related Instruments 0% 20% Very high
Debt and Money Market Securities 0% 25% Low to Moderate
Units issued by REITs and InvITs 0% 10% Moderate to high

Why to invest in the Axis Business Cycle Fund?

Here are a few reasons to invest in such mutual fund schemes.

1) The mutual fund invests in opportunities that arise during different stages of business Cycle in the Indian economy. These are unique opportunities where such mutual funds can benefit.

2) In the recent past we are seeing the business cycles getting shortened. This can provide numerous opportunities.

Risk factors of investing in such funds

One should consider some of these risk factors / negative factors before investing.

1) It invests in opportunities arising out of various stages in the business cycle. This would limit the capability of the fund to invest in other themes / sectors.

2) It invests based on opportunities arising out of various stages of the business cycle that could be high in one period and lower in another period. Though we have seen the shorter business cycles in the recent past, the returns could highly fluctuate.

3) Since this scheme invests in specific opportunities for companies in special situations, concentration risk is extremely high.

4) It invests some amount in foreign securitized debt which has geopolitical risk and currency risk.

5) It invests in REITs and InvITs which are considered as high risk.

6) It invests some portfolio in debt instruments which have turned to be risky these days.

7) You can refer complete risk factors by going through the scheme related documents.

Performance of existing Business Cycle Funds

Currently there are a funds in this segment. Here are the performance details.

Scheme Name  1Y 3Y 5Y
Tata Business Cycle Fund 11.6%
ICICI Prudential Business Cycle Fund 8.7%
Aditya Birla Sun Life Business Cycle Fund 4.1%
HSBC Business Cycles Fund 3.2% 15.1% 6.9%
Baroda BNP Paribas Business Cycle Fund 3.0%
IDFC Emerging Businesses Fund -5.6%

Also Read: Best Investment Plans to earn 1 Crore

Axis Business Cycle Fund NFO – Should you invest or avoid ?

Axis Business Cycle Fund invests based on a business cycle’s investment theme. Such opportunities could be high in one period (e.g., post covid pandemic) and limited number of opportunities in another period. The returns can fluctuate from year on year. As indicated in our earlier articles, this is not that exciting theme. High risk investors who still want to test with such themes can invest for at least 5 years’ time frame. Otherwise, one should avoid such schemes.

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Suresh KP

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