Cycles to your advantage

In the mind of many of us who invest in equity mutual funds, the map of the equity markets is very simple: Companies are large or small; and companies belong to different sectors or industries. We think that mutual funds can either be fully diversified-meaning that they will invest in any company regardless of size or sector; or they can be specific to a size or sector. So we think of large-cap or mid-cap funds; and, for example, technology or banking funds. However, a revolutionary new fund from L&T Mutual Fund is about to add a new--and far more useful-dimension to this way of classifying companies. Of course, this new dimension has been used by sophisticated equity investors for quite some time. However, it's one of a kind in the world of Indian mutual funds and adds a powerful new weapon in the arsenal of the Indian fund investor. This fund is the 'L&T Business Cycles Fund'. As the name indicates, the fund's investment strategy is linked to something called 'Business Cycles'. To better appreciate how one can use this concept-and L&T MF's new fund-to enhance one's investment returns, let's take a closer look at this concept of business cycles. Here's what Wikipedia has to say: 'The term business cycle (or economic cycle or boom-bust cycle) refers fluctuations in aggregate production, trade and activity over several months or years in a market economy. The business cycle is the upward and downward movements of levels of gross

This article was originally published on July 30, 2014.