DSP Business Cycle Fund

DSP Business Cycle Fund has delivered a 1Y SIP XIRR of 4.74%, significantly trailing the thematic category average of 11.61%. Calendar year returns have been muted, with -4.83% in 2026, 3.83% in 2025, and just 0.11% in 2024, indicating weak recent performance across market conditions. The 1Y rolling return mean of 6.43% (lump-sum) confirms a subdued return environment over the past year.

The fund shows modest drawdown characteristics, with a maximum drawdown of just -0.15% over 57 days and a recovery period of 117 days, though it has experienced 2 drawdown events exceeding 10% historically. The Calmar Ratio of 0.4387 suggests modest risk-adjusted returns relative to the depth of its worst drawdowns. Overall, recent volatility appears contained, but the low returns paired with meaningful historical drawdown events warrant caution.

The portfolio is heavily weighted toward financials, with Banks accounting for 26.2% of assets and ICICI Bank (9.85%), HDFC Bank (9.55%), and Axis Bank (5.42%) as the top three holdings. With 55 total holdings, the fund is reasonably diversified at the stock level, though sector concentration in Banks is pronounced. Cyclical sectors like Automobiles (9.5%), Cement, Realty, and Construction align with the fund's business cycle mandate.

The fund's 1Y XIRR of 4.74% falls well short of the category average of 11.61%, placing it in the lower tier of thematic peers. With no multi-year XIRR data available for the fund itself, consistency over longer horizons cannot be fully verified, but recent calendar year returns (0.11%, 3.83%, -4.83%) suggest persistent underperformance versus the category's strong 3Y-10Y averages of 16-17.5%. Investors should compare longer-term fund-specific data before drawing firm conclusions.

This fund suits investors with a high risk tolerance and a long time horizon of 5-7 years or more, given the cyclical nature of its portfolio and its current underperformance phase. It is best used as a satellite allocation (5-10% of portfolio) rather than a core holding, since thematic funds require active timing of business cycles. Investors should be comfortable with periods of extended underperformance, as recent returns demonstrate.

• Low recent volatility with a maximum drawdown of only -0.15% and a contained 57-day drawdown duration
• Well-diversified portfolio of 55 stocks led by quality large-caps like ICICI Bank and HDFC Bank
• Competitive expense ratio of 0.74% for a thematic fund in the Direct plan

• 1Y SIP XIRR of 4.74% is less than half the category average of 11.61%, indicating significant underperformance
• Heavy sector concentration in Banks (26.2%) exposes investors to financial sector-specific risks
• Weak calendar year returns across 2024-2026 (0.11%, 3.83%, -4.83%) suggest a prolonged lackluster phase