Invesco India Business Cycle Fund - NFO Overview

 

Invesco India AMC has come out with NFO of "Invesco India Business Cycle Fund", which is an open-ended thematic equity scheme following business cycles based investing theme. 

NFO Period: February 6 - 20 2025.

 

Why invest in Business Cycles Fund?

 Economic cycle is characterized by different phases; each presenting a unique investment opportunity. 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.

Business cycle investing focuses on assessing sub-segments within a sector and identifying emerging themes that provide structural benefits. A Business Cycle Fund invests predominantly in equity and equity related securities, with a focus on riding business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy.

 Why Invesco India Business Cycle Fund?

- The Fund takes a holistic investment approach, which focuses not only on economic & market cycle, but also considers company’s lifecycle.

- The Fund aims to invest in companies benefiting from structural changes in the economy, as well as strong turnaround themes.

- The Fund aims to make investments across market caps, sectors and industries, thereby diversifying portfolio to manage risks.

 

Investment Framework:

The Fund aims to identify economic trends and investing in the sectors & stocks that are likely to outperform at any given stage of business cycle in the economy.

·         A combination of top-down and bottom-up focusing on sectors and stocks in the growth phase ·         Investments across market capitalization ·         Focus on companies in pro-cyclical phase (~70%) and some exposure to companies in counter cyclical phase (~30%) ·  Fund may have significant overweight/underweight position in sectors/sub-segments vis-à-vis the benchmark ·         Focus will be on diversification to manage sector/stock specific risks Thus, the fund’s investment style will be largely Growth biased.

Stock Selection approach and Themes beneficiaries

 While constructing the portfolio, the Scheme would follow top-down approach for identifying the stage of business cycle and sector opportunities. Subsequently, through bottom-up approach Scheme endeavors to identify strong companies within the sectors.

 

The fund would prefer to invest in companies in the startup and growth phases(in company's lifecycle as shown below), where the potential for returns is highest.

In business cycles, themes influence different sectors, sub-segments and companies differently. The fund may focus on few of the following themes (but not restricted to only these) influencing the current business cycle 

How will the Fund Invest?

 

Who should Invest in this fund?

·           Investors that are comfortable with volatility & expecting a better risk return tradeoff

·           Investors with a high-risk appetite and long-term investment horizon of 5 years and above, having a lower near-term liquidity needs

·           Seasoned investors who are looking to invest in a Business Cycles theme-based fund

Risks associated with the fund:

• Investing in a thematic fund is based on the premise that the Fund will seek to invest in companies belonging to a group of sectors benefiting from the business cycle. This will limit the capability of the Fund to invest in some other sectors.

• The scheme being thematic in nature will be affected by the risks associated with business cycles and company lifecycle and macro environment overall

• In addition, as with all equity investing, there is the risk that companies benefitting from the theme will not achieve its expected earnings results, or that an unexpected change in the market or within the company may occur, both of which may adversely affect investment results. 
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• However, the fund will aim to restrict sector specific exposure to 10% and company specific exposure to 5% of the total scheme AUM, to reduce risk arising from theme specific investment strategy.

 

Thus, investing in a thematic fund could involve potentially greater volatility and very high risk.

[Refer to the SID of the scheme for detailed Risks]

 

Fund Managers:  Mr. Aditya Khemani (Fund Manager – Equities) & 

                              Mr. Amit Ganatra (Head – Equities)

 Load Structure:  

Entry Load: NA; 

Exit Load: 0.5% - if redeemed/switched out within 3 months from the date of allotment.

                      Nil - if redeemed/switched out after 3 months from the date of allotment

 

Benchmark: Nifty 500 TRI   

Disclaimer: Above article is based on data available here. Please refer to the documentation available at the site for more information regarding the scheme. The above content is for information purpose only and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Recipients of this communication should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice, verify the contents and arrive at an informed investment decision before making any investments. Investor shall note that there is no assurance or guarantee that the investment objective of the scheme will be achieved. 

 

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.