HDFC Business Cycle Fund NFO launched: Benefits & Risk

HDFC Asset Management Company (HDFC AMC), an investment manager for HDFC Mutual Funds, has launched a new HDFC Business Cycle Fund NFO. In this article, we will share all that we know about the HDFC Business Cycle Fund, what is it, what an NFO means, what benefits you get with it, and who can invest in this HDFC new mutual fund and the risk associated that you must know.

HDFC Business Cycle Fund is a new mutual fund launched by HDFC today. If you are aware, HDFC had also launched two new mutual funds recently, HDFC Nifty IT ETF & HDFC Nifty Private Bank ETF. The new fund offer (NFO) for both of these funds is ending today. As for the HDFC Business Cycle Fund, the NFO offer is from November 11 to November 25, 2022.

What is an NFO Offer?

An NFO offer is a New Funding Offer that is issued by an organization for the launch of a new scheme. The benefit of NFO is that similar to IPOs, you invest in the fund/stock at an absolute price before it gets listed on the share market, hence NFOs are cheaper than existing funds. However, there is significant risk involved too.

“HDFC Business Cycle Fund aims to invest in businesses likely on the cusp/midst of a favorable business cycle,” says HDFC Mutual Fund.

The mutual fund's company explained the HDFC Business Cycle Fund with an example of a GPS. How GPS helps us when we want to know the fastest routes and avoid the ones with traffic jams. In the same way, the HDFC Business Cycle Fund helps investors to achieve favorable business cycles, while avoiding companies about to enter/in a business downcycle.

Fund Name: HDFC Business Cycle Fund

Fund Type: Open-ended Mutual Fund

Fund NFO Offer Period: November 11 to November 25, 2022

Fund Manager: Mr. Rahul Baijal, has over 20 years of experience in Fund Management and equity research.

Benefits: Higher confidence in business cycle forecasts vs economic cycle forecasts

Investors may gain from the dual benefits of earnings growth and improvement in valuations

Entry Load: Not applicable

Exit Load: Exit Load of 1% is payable if units are redeemed before 1 year

Lock-in Period: NIL

Investment Options: Regular & Direct

Suggested Investment Period: 3 Years

Risk: Very High

For complete information about the HDFC Business Cycle Fund, please visit here

If you are planning to go for a regular investment option, you can check out our article on the best stock trading apps to find out the best trading app for you.

Read: Best Share Market Trading Apps 2022

Commenting on the benefits, HDFC Mutual Funds did not specifically mention the benefits of the HDFC Business Cycle Fund. The company did however mentioned some benefits of business cycle investing which investors may expect from the newly launched HDFC mutual fund as well.

Here’s what HDFC Mutual Fund Said:

“Business Cycle investing enjoys benefits, such as higher confidence in business cycle forecasts vs economic cycle forecasts. In business upcycles, investors may gain from the dual benefits of earnings growth and improvement in valuations. In business cycle investing, one needs an agile investment strategy that dynamically rotates investments based on an assessment of stages of business cycles”

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As with any other mutual fund, the HDFC Business Cycle Fund also has some risks associated with it. Commenting on the risk of the newly launched fund, HDFC said:

“HDFC Business Cycle Fund will manage risks by being adequately diversified across sectors/sub-sectors/market cap, and across a number of stocks. It is therefore a well‐diversified fund suitable for long-term investments via both lump sum and SIP. “

Investors must note here that their investment will be at very high risk.

It depends on your risk appetite & investment strategy. A mutual fund can be highly rewarding and at the same time, can be highly risky, depending on the organization, stock, or funds. While we cannot really answer this question for you, we would suggest first knowing the complete information about the funds you are investing in, analyzing what its competitive advantages are and the risk involved, and only then consider investing or not.

Talking about HDFC AMC. It is a giant asset management company that as of September 2022 manages assets worth more than 4.22 Trillion. 

Sharing some quick answers to your questions regarding business cycle funds, HDFC mutual funds, or HDFC Business Cycle NFO offer

1. What is a business cycle fund?

All businesses have 4 stages of growth, namely Expansion, Peak, Contraction, and Trough. A business cycle fund works on the system of investing in businesses & stocks during their expansion or peak stages, at the cusp of time they are most likely to outperform.

2. Which are the best working HDFC funds?

As per Groww, the best working HDFC funds are HDFC Midcap Opportunities Fund which gives approx 8.3% return per year and HDFC Top 100 Fund which gives approx 5.6% return per year.

3. What is New Fund Offer Period?

New Fund Offer or NFO is an introductory offer given during the launch of a new scheme or fund. It is different for different organizations and schemes. As for the HDFC Business Cycle Fund, the NFO offer period is till 25th November 2022

Disclaimer: All the information/views shared are not personal views/advice of the author or Desidime. But rather, information collected from sources that are considered reliable. Lastly, investing in mutual funds is risky.

Source(s):

HDFC Business Cycle Fund PR

HDFC Business Cycle Mutual Fund product page