L&T Mutual Fund launches L&T Business Cycles Fund

[json07]

Any thoughts on this fund? i am hearing this is a new concept and this is a good time (ofcourse, timing anything is BS!)

 

[sammie2019]

@json07

1. If only these guys knew the periods of high growth or cyclical growth
   BEFORE the said time.
2. Putting the same strategy on to past data and making it work like magic
   and giving >27% is easy to do. I can do it even better by just selling at
   market top in late 2007 and buying at the market dip in 2009.
3. Concentrated sectoral funds do not work most of the times.
4. The managers of the fund have been there for 1-2 years only at this fund
   house. What guarantee is there that they will be there for a longer time in
   the future for execution of this strategy.

 

[profmaliki]

@json07 I avoid NFOs. Right now, the fund would just begin investing in the market and the valuations are not in favor of a fund manager looking at cyclicals. Wait a good 3 years or more until the fund and it's manager has established a track record.

Unlike a diversified fund, this one has the mandate to go full on a complete sector leaving it vulnerable to sectoral shocks. A few years from now, you'd be able to see the fund's beta (does it rise as high as it's benchmark and fall as much), it's alpha (does it beat it's benchmark) among other statistical measures. Until then, you would be hoping.

 

[sammie2019]

@json07 Check out the history of a similar fund from IDFC here.