Mutual Funds: Despite Market Downturn, This Fund Turned ₹1 Lakh into Over ₹2.5 Lakh in 5 Years

Business Cycle Funds Shine Amid Weak Markets
Even as the Indian stock markets continue to face turbulence, certain mutual funds have delivered impressive returns, outperforming benchmarks like the Nifty 500 TRI. Business cycle funds, in particular, have demonstrated resilience, turning a modest investment of ₹1 lakh into over ₹2.5 lakh in five years.

Performance Highlights:

• ICICI Prudential Business Cycle Fund: 1-year return of 18.12%, 3-year return 22.82%
• Kotak Business Cycle Fund: 1-year 10.48%, 3-year 17.80%
• HDFC Business Cycle Fund: 1-year 8.59%, 3-year 14.97%

How Business Cycle Funds Work:
These funds primarily follow an open-ended equity model and adopt an opportunistic, top-down approach based on the current stage of the business cycle. By analyzing macroeconomic indicators such as GDP growth trends, inflation, interest rates, fiscal policies, and global economic conditions, fund managers identify sectors likely to outperform, and then select stocks within those sectors.

Returns Over Five Years:
For instance, ICICI Prudential’s Business Cycle Fund, over a five-year period, has grown ₹1 lakh into ₹2.51 lakh. In comparison, the same investment in Nifty 500 TRI would have grown to ₹2.06 lakh. Investors following a monthly SIP of ₹10,000 in this fund since inception would have accumulated approximately ₹9.74 lakh by 31 January 2026, achieving a CAGR of 18.47%, against 13.11% in Nifty 500 TRI.

Expert Insight:
S. Naren, Chief Investment Officer at IPRU AMC, notes that India’s economy is inherently cyclical, and leadership in equities shifts with the business cycle. Business cycle funds are designed to capitalize on these shifts, ensuring long-term capital growth even in volatile markets.