The Fund seeks to generate long-term capital appreciation by investing predominantly in equity and equity related securities with a focus on navigating business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy. There is no assurance that the investment objective of the Scheme will be achieved.
The Scheme aims to generate capital appreciation by investing predominantly in equity and equity related securities with a focus on navigating business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy. Business cycles in an economy are typically characterized by the fluctuations in economic activity measured by real GDP growth and other macroeconomic variables. A business cycle is basically defined in terms of periods of expansion and contraction. During expansion, an economy experiences an increase in economic activity as evidenced by real GDP growth, industrial production, etc. whereas during contraction, the pace of economic activity slows down. The business cycle is a critical determinant of equity sector performance over the intermediate term and the relative performance of equity market sectors typically tends to rotate as the overall economy shifts from one stage of the business cycle to the next, with different sectors assuming performance leadership in different economic phases. Also, different economic cycles have an impact on investing style such as growth, value, quality and others such qualitative and quantitative factors which have bearing on overall equity returns. The fund management would involve active allocation between sectors, stocks and styles based on the stages of business cycles in the economy. The fund manager will consider macro-economic parameters, consumer sentiment and overlay it with an internal, proprietary model using fundamental and technical analysis of stocks to arrive at the portfolio which will comprehend the sectors, stocks and style which will suit the business environment. The factors to be considered may include (i) Macro Economy (Global economic growth, Monetary policy stance, Liquidity, geopolitics); (ii) Domestic Economy (Economic growth outlook, monetary and fiscal policy, credit cycle, rural and urban economy); (iii) Government Policy Reforms (Production Linked incentives, digitization, tax boost, Goods & Services Tax implementation, etc.); (iv) Private Consumption & Capex (demand for goods, services, housing, capex demand, etc.). The Scheme would follow the top-down approach of portfolio construction to identify the stage of business cycle, through domestic and global risk appetite and liquidity analytics, to arrive at a risk on/risk off assessment for sectors. The Scheme portfolio is therefore likely to be focused on a few selected sectors and styles which are likely to do well in a particular business cycle. The stock selection of the scheme would emphasize on identifying companies with sound corporate managements and prospects of good future growth. The fund managers will favour companies that offer the best value relative to their respective long-term growth prospects, returns on capital and management quality. The Scheme may also invest some portion of the investible funds in equity and equity related securities of companies other than in the companies selected based on the business cycle theme. An exposure to various derivatives instruments is likely - for the purposes of hedging, portfolio balancing and optimizing returns. In case of Debt and Money Market securities, the scheme aims to identify securities which offer optimal level of yields/returns, considering risk-reward ratio. With the aim of controlling risks rigorous in depth credit evaluation of the securities proposed to be invested in will be carried out by the Risk Management team of the AMC. The credit evaluation includes a study of the operating environment of the issuer, the short as well as long-term financial health of the issuer. The AMC may consider the ratings of such Rating Agencies as approved by SEBI to carry out the functioning of rating agencies. The scheme may also invest in Units issued by REITs & InvITs after doing due research on the same. The scheme may also invest in preference shares. Further, the Scheme may invest in other schemes managed by the AMC or in the Schemes of any other Mutual Funds, provided it is in conformity with the prevailing Regulations. As per the Regulations, no investment management fees will be charged for such investments. The Scheme may use derivative instruments like Interest Rate Swaps, Interest Rate Futures, Forward Rate Agreements, or other derivative instruments for the purpose of hedging, portfolio balancing and other purposes, as permitted under the Regulations. Hedging using Interest Rate Futures could be perfect or imperfect, subject to applicable regulations. Usage of derivatives may expose the Scheme to certain risks inherent to such derivatives. For detailed derivative strategies, please refer SAI. It may also invest in securitized debt. The scheme may undertake repo transactions in corporate debt securities in accordance with the directions issued by RBI and SEBI from time to time. Such an investment shall be made subject to the guidelines which may be prescribed. For the present, the Scheme does not intend to enter into underwriting obligations. However, if the Scheme does enter into an underwriting agreement, it would do so with the prior approval of the Board of the AMC/Trustee.
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