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Our Bureau

To invest in cos engaged in discovery, production or distribution

Kolkata June 7 Reliance Mutual Fund has worked out an equity fund which will chiefly invest in companies engaged in the discovery, production or distribution of natural resources. Named Reliance Natural Resources Fund, it will be benchmarked against the Standard & Poor's Goldman Sachs Spot Commodity Index.

As the draft offer document filed with SEBI has mentioned, at least 70 per cent of the fund's net assets will be invested in equities. There may be partial exposure to foreign securities, subject to regulatory limits.

Companies operating in natural resources industries include those that are considered as principally engaged in the discovery, development, production, or distribution of natural resources, or are service providers for these areas. Also covered are companies engaged in the development of technologies for the production or efficient use of natural resources in addition also furnishing of related supplies or services.

Natural resources may include, energy sources, metals, forest products, food and agriculture, and other basic commodities. Companies related to these areas may own or produce oil, natural gas, precious metals etc. Further, these may provide related services such as mining, drilling, rigging and the like.

"A particular company will be considered to be principally engaged in natural resources industries if at the time of investment at least 50 per cent of the company's assets, gross income, cash flow, or net profits is, committed to, or derived from, those industries", the offer document has mentioned.

The fund will invest principally in equity securities of issuers in natural resources industries. It may invest in securities of issuers located anywhere in the world. Normally, it will invest in entities listed on stock exchanges in London, New York and Toronto, besides BSE.

SBI Magnum COMMA

In terms of positioning, the proposed Reliance MF fund will probably have no comparison - save SBI Magnum COMMA, which comes somewhat close. The latter aims at companies engaged in the commodity businesses, oil & gas, metals, materials and agriculture making up its investment universe.

The SBI MF fund, launched in July 2005, has delivered 31 per cent or so since inception (as on June 6), according to Value Research. Its key holdings, as on end-May, include Gujarat Mineral Development Corporation, Reliance Industries, Jindal Saw and Kesoram. It managed about Rs 445 crore.

More Stories on : New Fund Offer | Mutual Funds

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