Explainer: Investing Based On Business Cycle

When it comes to investing, there are various ways in which one can invest in the equity market. Over the past few years, mutual fund companies have launched funds based on business cycles. But what does the business cycle mean? A business cycle or an economic cycle refers to oscillation between periods of economic expansion and contraction. Typically, business cycle-based investing means adjusting investment strategies according to the different stages of the economic cycle. Phases of Business Cycle Generally, the business cycle comprises four phases - expansion, peak, contraction, and trough. The expansion phase involves a period of economic growth, increased production, and rising employment. The peak is the point where the economy reaches its highest level of activity. Employment is often at its peak, and key economic indicators are strong. However, it also signals a...