Consumer Cyclical Mutual Fund: The Funds Which Allow Gaining From Market Inefficiency…!!
Market performs in cycles as it goes into a period of growth and decline. It is quite visible in price movement that rises, falls and returns to the point of origin. These cycles help consumers, analyst and traders to determine the best prices at which to buy and sell securities. It is prevalent in all aspects of life; they tend to be in either short or very long. For an investor, it’s an excellent opportunity to take the benefit from the market inefficiency and business cycles by investing in cyclical stocks.
A Cyclical stock is securities which prices are affected by macroeconomic and structural changes in the economy. These companies have a direct relation to the economy and make an upward movement or downward movement as the economy moves up and down. There are various categories of cyclical stocks, one of the most important among them is Consumer cyclical. These are stocks that focus on consumer sector goods. These sector companies focus on the company that produces wants rather than needs. It mainly includes companies of apparel, leisure equipment, hotel, retail, and consumer retailing operations. Most of the investors don’t have an idea about these stocks, so they invest through the consumer cyclical mutual fund.
Consumer cyclical mutual funds invest in those companies, which invest in the company’s stock which controls a large portion of retail consumer goods. It invests at least 80% of assets in securities of companies principally engaged in consumer-related goods and services. The funds select the equities primarily based on fundamental analysis of factors such as the company’s financial condition, industry position, market as well as economic conditions. They mainly follow the bottom down approach to select any companies. Here’s a list of some of the major consumer funds:
- Tata Consumer Fund
- Mirae Asset Great Consumer Fund
- UTI India Consumer Fund
- Canara Robeco Consumer Trends Fund.
Investing in the consumer cyclical mutual fund has various benefits. Let’s look at some of the benefits of investing in the consumer cyclical mutual fund:
- The companies in these segments are the most recognizable in the stock market.
- The products of these segments tend to sit high on the shopping list. It is considered as staples to indicate they are an essential part of most consumer monthly budgets.
- These funds aim to generate robust long-term investment returns and protected by short term economic driven demand swings.
- The industry has a reputation for outperforming other sectors during the early stage of economic slowdown and recession.
If you are looking to invest in mutual funds, hop on to www.gulaq.com or you can talk to the experts.
*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.