Business Cycle Funds identify economic trends and pick sectors and stocks which are likely to outperform from these changing trends. Business Cycles are defined based on periods of expansion and contraction. Business Cycle Fund Managers follow a top-down approach where they identify sectors which may see a turnaround soon. Fundamentally-solid stocks are then picked from these sectors. The performance of Business Cycle Funds depends on the fund managers skills and track record. However, business cycle funds are a risky investment for first time equity investors and are suitable only for high risk tolerance investors. Business Cycle Funds could be a part of your satellite portfolio.
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