Business cycle funds offer 16.05% in one year

Thematic funds focusing on business cycle theme have offered an average return of 16.05% in one year, according to ACE MF database. The category offered around 27.45% return in three years, and 12.01% in five years.

There are 10 schemes in the category. Five schemes have completed one year in the market. Four schemes are relatively new and one scheme is opening for subscription next week.

HSBC Business Cycles Fund, the oldest scheme in the category, offered around 16.84% in one year. Aditya Birla Sun Life Business Cycle Fund offered the lowest return of 9.45% in the one-year horizon.


Most of the schemes have managed to offer double-digit returns in this year till date, except for Aditya Birla Sun Life Business Cycle Fund. The scheme offered 6.65% in this year till date. HSBC Business Cycles Fund gave the highest return of around 15.72%, followed by ICICI Prudential Business Cycle Fund which gave 14.12% in this year till date. The category gave an average return of 11.76% in this year till date.

HSBC Business Cycles Fund, the oldest scheme in the category, has completed nine years of existence. The scheme has offered 12.09% since inception.


Business cycle funds follow various cycles of the economy and take exposure to different sectors which are expected to perform well based on the economy. The exposure is based on various real economic indicators or factors such as GDP, Inflation, interest rates, fiscal deficit, capex cycles, and government policies and regulations. These funds are less risky than the regular sectoral or thematic schemes as they focus on multiple sectors and not one particular sector.

Thematic or sector schemes invest most of their corpus in a particular sector, and the performance of schemes is based on performance of the sector. That is why thematic or sector funds are recommended only to investors with thorough knowledge about the sector.

You should invest in these schemes only if you have a long investment horizon or have intimate knowledge about the sector to time the entry and exit in these schemes. Remember, every sector or theme can go out of fashion depending on the economic conditions. You should not make hasty decisions in those phases.