Tata Business Cycle Fund reported an average AUM of around Rs 2,617 crore for April to June 2026, while Axis Business Cycles Fund had around Rs 2,049 crore and Bandhan Business Cycle Fund had around Rs 1,206 crore. These figures come from a third-party page that cites the quarterly disclosure of the Association of Mutual Funds in India (AMFI), and they are not taken from AMFI directly.
A business cycle fund is an equity scheme that moves its money between sectors as economy moves through its phases of growth and slowdown. The category is still small when placed against the mutual fund industry, whose AUM reached Rs 73.73 lakh crore in March 2026, an increase of 12.2% year on year, as per AMFI data.
How a business cycle fund is classified
Bank of India Mutual Fund's scheme information document describes the business cycle fund as an open-ended equity scheme that invests in sectors based on the business cycle. Same document places the scheme under the thematic fund category, so it is treated as a thematic fund and not as a separate type of product.
The limits on investment and exposure for this category trace back to SEBI is the statutory regulator of India's securities market, with the legal duty to protect investors and to promote and regulate that market. Read the full meaning of SEBI Master Circular of 27 June 2024, which the scheme document cites. The fund name may suggest that the manager is free to time the market, but the rulebook gives the scheme a fixed place within thematic funds.
In 2017, SEBI had allowed one fund house to run more than one sectoral or thematic scheme, as long as the schemes invested in different sectors, as per a Business Standard report of 6 October 2017.
What the 2026 overlap cap changes
SEBI's circular of 26 February 2026 on categorisation and rationalisation supersedes clause 2.6 of the 2024 Master Circular, and it took effect on the day it was issued.
- Overlap limit: a sectoral or thematic scheme can overlap at most 50% of its portfolio with other equity schemes in the sectoral or thematic category and other equity categories, except large cap schemes, and this limit applies to business cycle funds as thematic schemes.
- Measurement: the overlap is calculated every quarter, on a daily average basis.
- Existing schemes: the sectoral and thematic schemes already running have three years to comply, and a glide path has been provided for the change.
Fund houses with a thematic scheme will now have to check how its holdings match with their other equity schemes, except large cap schemes. Investors holding such schemes may see changes in portfolios over the coming years.
