L&T Mutual Fund today launched 'Business Cycles Fund', an open-ended equity scheme, to generate long-term capital appreciation. The fund will focus on riding business cycles through strategically changing allocation between various sectors and stocks at different stages of business cycles in the economy.
The aim of the fund is to generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related securities, including equity derivatives, in the Indian market. "L&T Business Cycles Fund will invest in companies that are strategically placed, to make the most of the economy's business cycles. During high growth times, the portfolio will be aimed at cyclical companies. "On the other hand, the portfolio could largely comprise defensive companies to help generate stable returns during periods of low growth," L&T Investment Management's Chief Executive Officer Ashu Suyash said.
The business cycle approach helps the fund potentially deliver better risk adjusted returns and enable investors to make the most from the stock market at all times, he added. The new fund offer (NFO) will remain open from July 30 to August 13, 2014. "L&T Business Cycles Fund has the flexibility to point its portfolio to cyclical or defensive stocks depending on the business cycle. "Overall, the focus will be on identifying companies that offer best value relative to their respective long-term growth prospects, returns on capital and management quality," L&T Business Cycles Fund's Co-Head of Equities and the Fund Manager Venugopal Manghat said in a statement.
The fund is benchmarked to the S&P BSE 200 and will have a normal allocation to equity and equity-related securities within a range of 65 per cent to 100 per cent of net assets. The allocation to debt and debt-related instruments will be within a range of 0-35 per cent, a company release said. The minimum initial amount for lump sum investments is Rs 5,000. The Systematic Investment Plan (SIP) option will be available during the NFO period with a minimum of six instalments and each single instalment of a minimum of Rs 1,000 each under the monthly SIP option, it added.