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Tata Business Cycle Fund NFO - Investment Objective, Features, Taxation and SIP details

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Manish Kothari
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Tata Business Cycle Fund NFO

Tata Mutual Fund has announced the launch of the Tata Business Cycle Fund. It is an open-ended scheme that follows a business cycle-based investing theme.

The New Fund Offer (NFO) starts on 16th July 2021 and will end on 30th July 2021. The scheme will reopen for continuous sale and repurchase before 11th August 2021.

Investment Objective 

The scheme’s investment objective is to generate long-term capital growth by investing its assets in equity and equity-related securities, focusing on riding business cycles through dynamic allocation.

Features

  • The fund will be investing a minimum of 80% of its assets in equity instruments based on the business cycle theme.
  • The fund will also give exposure to other equity instruments along with debt & money market instruments, gold ETF, REITs, and InvITs.
  • The fund will follow the business cycle theme to get benefits from all the different business cycles in the economy.
  • Different business cycles in the economy - Expansion, Slowdown, Recession, and Recovery.

Characteristics of Tata Business Cycle Fund

1. Portfolio Size

The size of the portfolio will vary depending on the cycle like in a contractionary cycle, the fund may have more stocks in the portfolio as compared to the expansionary cycle.

2. Sector Allocation

The business cycle theme allows for a more aggressive stance in terms of sector underweight or overweight compared to other funds.

3. Portfolio Churn

The churn in the portfolio will depend on how quickly the cycles are turning. The sudden downswings or upswings may cause higher churn.

4. Market cap allocation

The fund can allocate the assets across the market cap with no constraint on the market cap. The allocation will be purely based on the business cycle.

Tata Business Cycle Fund - Investment Approach

1. Aim

The fund aims to deploy the business cycle approach to investing to identify economic trends and invest in stocks and sectors that are likely to outperform.

2. Economic Trends

Investments are done as per the economic conditions like cyclical during expansion and defensives during contraction.

3. Focus on sector calls

During expansion - The fund will either buy the sector leaders or companies benefitting disproportionately from the sectoral tailwinds.

During contraction - Invest in companies from sectors that provide cushion during downcycles.

4. Stocks selection

  • The extent of leverage to the cycle
  • Market cap agnostic
  • Management record

Who Should Invest?

This scheme is suitable for investors who are -

  • Interested in long-term capital growth.
  • Interested in investments in a business cycle based investing theme.
  • Recommended for investors with an investment horizon of 5 years & above.

Asset Allocation Pattern

InstrumentsMinimum % of total assets (Indicative)Maximum % of total assets (Indicative)Risk Profile
Equity and equity-related instruments selected on the basis of business cycle80%100%High
Other equity and equity-related instruments 0%20%Moderate to High
Debt & money market instruments and Gold ETF0%20%Low to Moderate
Units issued by REITs and InvITs0%10%Moderate to High

About the Scheme

Name of the fundTata Business Cycle Fund
Fund launched byTata Mutual Fund 
Asset Management CompanyTata Asset Management Limited
Type of schemeAn open-ended scheme that follows a business cycle based investing theme
Investment ObjectiveThe scheme’s investment objective is to generate long-term capital growth by investing its assets in equity and equity-related securities, focusing on riding business cycles through dynamic allocation
BenchmarkNIFTY 500 TRI 
Entry LoadNot Applicable
Exit Load

-10% units redeemed or switched out within 1 year- NIL

-More than 10% of units redeemed or switched out within 1 year- 1% of applicable NAV

-If units are redeemed or switched out after 1 year- NIL

Taxation

Taxed as Equity

-If units are redeemed within 12 months, gains are taxed as short term capital gain tax @15%

-If units are sold after 12 months, gains are taxed as long term capital gain tax @10% on the gains exceeding ₹ 1 lakh in a financial year

Minimum Application Amount ₹ 5,000 & in multiples of ₹ 1 thereafter
Minimum Additional Amount₹ 1,000 & in multiples of ₹ 1 thereafter
STP, & SWPAvailable
Plans Available
  • Regular
  • Direct
Options
  • Growth
  • Payout of Income Distribution & Capital Withdrawal
  • Reinvestment of Income Distribution & Capital Withdrawal
Fund ManagersMr. Rahul Singh

SIP Details

Type Minimum InstallmentsMinimum Amount
Daily SIP12₹150 & in multiples of ₹1 thereafter
Weekly SIP12₹150 & in multiples of ₹1 thereafter
Monthly SIP12₹150 & in multiples of ₹1 thereafter
6₹1,000 & in multiples of ₹1 thereafter
Quarterly SIP6₹1,000 & in multiples of ₹1 thereafter
4₹1,500 & in multiples of ₹1 thereafter

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