Why you should be wary of business cycle funds

Business Cycle Funds, as the name suggests, are supposed to benefit from timing the business cycle. This means that the funds outperform by buying cyclical sectors during an upturn and defensive sectors during a downturn. Another version of this category is a fund that can pick companies at the right time in their life-cycle (early stage, mid or mature). The reality, however, does not bear up to this promise. Most business cycle funds are of too recent vintage to have a meaningful track record, and the one that has a long record failed to beat the S&P BSE 500.

Click here to read