Mutual Fund giving 18.47% return in 5 years, is now the right time to invest?

News Topical, Digital Desk : ICICI Prudential Business Cycle Fund recently completed five years. Launched in January 2021, the fund has delivered impressive returns to its investors. According to the fund house, a monthly SIP of ₹10,000 (total investment of ₹6.10 lakh) has grown to approximately ₹9.74 lakh since inception. This translates to a compound annual growth rate (CAGR) of 18.47%. According to fund data, the benchmark Nifty 500 TRI has recorded a CAGR of 13.11% during this period. 

The fund has also benefited investors with lump-sum investments. Investors investing ₹1 lakh at launch would have had a total investment of approximately ₹2.51 lakh, representing a CAGR of 20.06%. In contrast, the CAGR of the Nifty 500 TRI over the same period was 15.47%. 

What is the strategy of the fund? 
The fund follows a business-cycle-based investment approach. Under this, it invests in different sectors based on the current economic situation. Its objective is to generate long-term capital appreciation by positioning the portfolio for expansion, recovery, and slowdown. The portfolio is largely focused on the domestic sector, with approximately 80% of assets expected to benefit from improved economic activity. Financials have the highest allocation. Additionally, the fund has stakes in automobile, construction, and select industrial sectors. The fund periodically reviews its holdings based on changing macroeconomic conditions.

S. Naren, Executive Director and Chief Investment Officer, ICICI Prudential AMC, said, "A large part of India's economy is naturally cyclical, and equity leadership changes as the business cycle changes. Our focus is on understanding where the economy is headed and aligning sector exposure accordingly over the next three to four years."

Should you invest?
This fund could be beneficial for long-term investors who can withstand market fluctuations. However, experts say that past performance does not guarantee future results and equity investments are subject to market risk, sector changes, and macroeconomic developments.

Read More: Mutual Fund giving 18.47% return in 5 years, is now the right time to invest?