(An open ended equity scheme following business cycle based investing theme)

HDFC Business Cycle Fund (“The Fund”) aims to invest in businesses likely on the cusp / midst of a favourable business cycle.

What is a Business Cycle? What is business cycle investing?

  • Business cycle is the journey across four phases of growth in business activity, observed in acceleration / deceleration across factors such as volume growth, pricing power, competitive intensity, cost consciousness, capex intensity, ROCE and business sentiment.
  • The focus in business cycle investing is to build a portfolio of companies that are likely to gain from favorable business cycles from a medium to long term perspective.

Why does business cycle investing make sense?

Higher confidence on forecasts

Estimating positioning of various business cycles and their trajectory can be done with higher confidence vs the general economic cycle

Correlation with valuations

When businesses are in upcycle, get dual benefit of earnings growth and improvement in valuation multiples

Investment strategy

Invest in businesses likely on the cusp/midst of favorable business upcycle, avoid businesses about to enter/in a downcycle

Ahead of the curve

Based on lead indicators, domain expertise and recurring patterns in business history, investing opportunities can be identified ahead of time

Agility

Investments across companies and themes are not static in nature and can be rotated based on stages of business cycles.

Portfolio Strategy – HDFC Business Cycle Fund

  • Blend of top down and bottom up approach
  • Core of portfolio (>80%) would be companies likely on the cusp / midst of favorable business cycle, while avoiding companies about to enter/in a business downcycle
  • Non-core (<20%) portfolio would consist of 1) growth stories relatively agnostic to the business cycle 2) stocks relatively better positioned within their sector 3) tactical opportunities with favorable risk-reward
  • Risk management: Adequate diversification (across sectors / sub sectors / market cap) along with an active approach towards business cycle selection

Who should consider investing?

This product may be suitable for investors who are looking for

  • Exposure to businesses likely on the cusp / midst of a favourable business cycle
  • A fund that is agile in rotation of investments based on assessment of stages of business cycles.
  • A product suitable for buy and hold / SIP for long periods of time
  • Investment horizon of 3 or more years

Product Labelling:

Name of scheme THIS PRODUCT IS SUITABLE FOR INVESTORS WHO ARE SEEKING* RISKOMETER OF THE SCHEME#

HDFC Business Cycle Fund (An open ended equity scheme following business cycle based investing theme)

  • to generate long-term capital appreciation/ income
  • investment predominantly in equity & equity related instruments of business cycle based theme

*Investors should consult their financial advisers, if in doubt about whether the product is suitable for them.

# The product labeling assigned during the NFO is based on internal assessment of the scheme characteristics or model portfolio and the same may vary post NFO when the actual investments are made

For latest riskometer, investors may refer to the Monthly Portfolios disclosed on the website of the Fund viz. www.hdfcfund.com


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