New Delhi, July 7 -- Business cycle funds are a category of thematic mutual funds that aim to capture investment opportunities across different stages of the economic cycle.

Instead of maintaining a fixed sector allocation, these funds actively shift their exposure across sectors, industries and market-cap segments based on the fund manager's assessment of changing economic conditions.

Let's understand how these funds work and the top 5 business cycle funds by Assets Under Management (AUM).

The investment approach is based on the premise that sectors tend to perform differently across different phases of the economy. A typical business cycle moves through four stages: growth, recession, slump and recovery.

As economic conditions chang...