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S. Vaidya Nathan

INVESTMENT can be considered in the Reliance Growth Fund, which has an impressive track record across different phases of the stock market. The portfolio appears to hold the potential to deliver gains and a substantial outperformance of the market, even if equities were to remain sluggish.

Investment can, however, be done in a phased manner as this would enable investors to take advantage of any weakness in equity prices. Buy this fund with a one- to two-year perspective.

The Reliance Growth Fund is aggressively managed. The strategy appears to be linked to the momentum in the market. A scrutiny of the portfolio over time indicates that the fund management team capitalises on trends in the market.

An aggressive approach to profit booking and a sizeable level of cash holdings, which are used to tap into trading opportunities have been a feature over a period of a time.

There has been a sharp rise in its asset base between January 2003 and July 2004. A more than 20-fold rise in asset base has been handled in an offbeat manner. It has opted to go for a larger number of mid-cap stocks instead of usual strategy of opting for large-cap stocks. It now has an asset base of about Rs 500 crore.

This fund was one of the superior performers in the bull market of 2003 with returns of about 140 per cent. It has, subsequently, too, performed well. The track record over five years has been good with annual returns of about 30 per cent.

Suitability: The mid-cap focus enhances the risk profile of the fund. So does the aggressive and momentum-based style of fund management. The fund does, however, sport returns that more than compensate for the risks involved. Investors could consider the fund as a complement to exposures in large-cap stocks or funds that invest in such stocks. Investors can opt for the dividend option due to its superior tax efficiency; dividend is exempt from tax.

Portfolio overview: Stocks such as United Phosphorus, Hexaware, Radico Khaitan, Sintex Industries and Jindal Steel, to name a few, are examples of the mid-cap stocks that have performed well in recent months.

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