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Kotak Mahindra Asset Management Company on Monday announced the launch of Kotak Business Cycle Fund, an open-ended scheme following a business cycle based investing theme, which would invest in stocks and sectors of the companies that can navigate through economic cycles.

The scheme opens for public subscription on 7 September and closes on 21 September. Investors can invest a minimum amount of 5,000 during the new fund offer (NFO) period.

According to the fund house, the term “Business Cycle" refers to various stages where a company or a specific sector undergoes a period of expansion, moderation and contraction in the business. Kotak Business Cycle Fund will take into account various economic parameters (GDP growth, current account deficit, corporate profit growth trend, inflation etc.), investment indicators (investment in capex, capacity utilisation, credit growth, etc.), business and leading economic indicators (business confidence index, purchasing manager index, etc.) before committing any investment.

“The fund aims to dynamically move between various sectors and stocks in a manner where it can benefit from the different economic and business cycles that economics is going through. It will follow a top-down approach to construct the portfolio where it will identify stages of the business cycle and then look into opportunities sector-wise. Once we identify a sector, we will then follow a bottom-up approach where we will try to identify strong companies within that sector. At most times our portfolio will have companies from a few selected sectors which are likely to do well in the particular business cycle that we currently are in. To select companies within the sector, we will use a combination of factors which include the business, management and valuation of companies," according to Pankaj Tibrewal, Senior Executive Vice President, Fund Management Equity, Kotak Mahindra Asset Management.

Nilesh Shah, Group President and Managing Director, Kotak Mahindra Asset Management said, “Kotak Business Cycle Fund provides a good opportunity for investors to diversify their equity portfolio as there are equity stocks across categories, which tend to do better at various stages of the business cycle. Even during challenging times of economic slowdown, these companies have managed to navigate the challenges and perform well across various economic parameters."

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