Sundaram Mutual believes the froth in the market is yet to settle after the dramatic fall of 6 per cent post the unexpected election outcome and subsequent bounceback of 3 per cent on Wednesday.

Anand Radhakrishnan, CEO, Sundaram Mutual said some of the sectors such as infrastructure and capital goods have run-up in the last few years and this has been toned down a bit but the valuation of the market still remains elevated.

Given the growing uncertainty, mutual fund investors should tone down their expectations and stay focused on inflation-beating returns from their equity investments, he added, while launching one-of-its-kind thematic fund on business cycle, which opened for subscription on Wednesday and will close on July 1.

The fund invests in four broad themes – Make in India, urbanisation, sustainability and technology – which is abbreviated as MUST. It will make dynamic allocation across sectors and market-cap with the freedom to include and exclude new themes.

Sunil Subramaniam, Managing Director, Sundaram Mutual said themes are driven by broader macroeconomic trends such as technology and innovation, government policy and spending, urbanisation, formalisation and premiumisation and can outperform broader markets. “Our fund will follow a dynamic, thematic approach to identify and capitalise on 4-5 emerging medium- to long-term mega global and local trends at inflexion points across sectors,” he said.

Benchmarked against Nifty 500 TRI, Sundaram Business Cycle Fund will invest in a portfolio of 35-45 stocks across sectors and market capitalisation. It will remain market cap and sector-agnostic with its focus only on high potential opportunities to harness key themes.

It will invest a minimum of 80 per cent in equity and related instruments chosen based on the business cycle, 0-20 per cent in other equity and related instruments, debt and money market securities and 0-10 per cent in units of REITs and InvITs.

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