The DSP company Cycle Fund, an open-ended equity investment strategy based on company cycles, was introduced by DSP Mutual Fund.
This fund gives investors the chance to participate in companies with a range of market capitalisations, covering large, mid, and small cap firms. The investing strategy’s main goal is to allocate assets in a dynamic manner to sectors and businesses with promising growth prospects, improving fundamentals, and appealing values.
The DSP Business Cycle Fund chooses sectors and businesses with significant growth or turnaround potential using a framework-driven methodology. It enables the implementation of cash calls and other risk management techniques in addition to active assignment to sectors during upcycles.
In addition to this, the fund provides an unrestricted investment strategy across market capitalisations by concentrating on recognising robust industry cycles, allowing investors to take advantage of growth prospects irrespective of the size of the company.
Moreover, it also divides its investing universe into major areas and examines them on an industry basis. It seeks to find industries that are near the bottom of their cycle, have strong growth potential, and are trading at low valuations relative to benchmarks.
Beyond that, the fund employs trained forensic analysts to screen out companies with inadequate corporate governance, even if they exhibit great growth potential.
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The fund uses a variety of risk management tactics, including portfolio hedging via put options and arbitrage opportunities.
It also retains the ability to invest up to 10% of its portfolio in Real Estate Investment Trusts (REITs) or Infrastructure Investment Trusts (InvITs) when equity market possibilities are limited.
Charanjit Singh, fund manager, DSP Mutual Fund stated: “Timing entry and exit of themes can be tricky for investors on their own and may sometimes lead to errors. Redeploying capital after exiting a sector also calls for a thorough evaluation. DSP Business Cycle Fund is strategically designed to navigate through different phases of business cycles while managing risks effectively. We believe this fund will provide investors with a unique opportunity to capitalise on changing market dynamics.”
The DSP Business Cycle Fund’s New Fund Offer (NFO) will go live on 27 November 2024, and end on 11 December 2024.
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