The Hindu Business Line : Reliance top choice for equity funds

The stocks from both the Reliance groups have been star performers in the recent rally is a well-known fact. But did you know that mutual fund managers had assumed a bullish stance in the Reliance stocks, ahead of their recent surge?

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Reliance Industries was, in fact, the most popular stock with equity fund managers in end-September. About 233 equity funds had exposures to the Reliance Industries stock in September; this covers most of diversified funds in operation.

Of these, over half (123 schemes) invested over 5 per cent of their portfolio in this stock. Further, about 30 equity funds held the maximum permissible limit of 10 per cent in the Reliance Industries stock. A weight of 10 per cent or more in a single stock is quite unusual for any equity fund, given regulatory limits on exposures to individual stocks and the fact that even small sized funds usually hold 30-40 stocks in their portfolio.

What is more, the stock’s weight in mutual fund portfolios climbed between August and September, but funds seem to have retained their holdings, rather than book profits. Only 25 schemes had a 10 per cent exposure to Reliance Industries in end-August, but this number climbed to 30 in September.

Fund managers seemed to be equally partial to the other index movers — Reliance Communication and Reliance Energy. Reliance Communication was also among the top ten stocks held across equity fund portfolios, with 189 schemes holding the stock in September. About 30 funds invested over 5 per cent of their portfolio in this stock. Reliance Energy was held by 108 schemes.

Mutual funds that were partial to stocks from the Reliance groups are likely to have reaped benefits in terms of their performance relative to the Sensex. Over the past one month, Reliance Industries has managed a 33 per cent gain, Reliance Communication a 31 per cent gain and Reliance Energy a 77 per cent gain in stock price, while the Sensex has managed a near 19 per cent appreciation.

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