The Hindu Business Line : Reliance Growth: Invest in phases

Investors with a high risk appetite can consider exposure to the Reliance Growth Fund. It tops the Indian equity fund category for performance over the last five years; during this period, it delivered an annual return of 65 per cent.

A focus on mid-caps and a growth-oriented style of investing has helped it register this impressive performance. However, its performance has been less consistent in the last two years, as the fund has had to deal with issues of a swelling asset size amidst a volatile market for mid-caps.

Correct timing of investment in the fund may play a greater role in determining your investment returns. Investments can be made in phases rather than on a lump-sum basis to minimise the impact of bad timing.

Suitability: At close to Rs 5,000 crore, Reliance Growth’s asset base is significantly larger than that of the typical diversified fund. Despite attempts to curb inflows, the fund continues to garner investor interest, courtesy its impressive long-term track record.

The fund has, however, coped with inflows reasonably well and retains its mid-cap bias, although it sticks to the larger, “discovered” mid-caps.

While the fund has a well-diversified portfolio of over 70 stocks, Reliance Growth remains suitable for investors with an above average risk profile.

The quality of the stocks in its portfolio points to an aggressive fund management style. While growth stocks (stocks of companies that are expected to grow at above-average growth rates) hold the potential to deliver superior returns, they are equally vulnerable to earnings disappointments.

Performance overview: Reliance Growth has delivered a return of 31 per cent over a one-year period, outperforming its benchmark the BSE-100 by a significant margin. The fund also measured up well when compared to a more broad-based index such as the BSE-500.

In the latest correction, Reliance Growth has contained declines in line with that of the BSE-500 and the fund is well within the top quartile of performance rankings.

The fund may have suffered deeper losses, had it not been for the significant cash holdings in the portfolio. Reliance Growth dynamically allocates 10-20 per cent of its portfolio to cash, derivatives and other short-term debt instruments.

Portfolio overview: Reliance Growth has a well-diversified portfolio, with exposure to any single stock rarely exceeding four per cent. The top ten stocks account for just 30 per cent of the portfolio. The fund does not take concentrated exposures either.

The portfolio tends to have a long tail; a large number of stocks that account for less than one per cent of the assets. This means the fund manager will have to get more calls right in order to outperform the market. But owning many stocks might be inevitable for the fund, given its large asset base.

The top sector holdings are now ferrous metals, pharmaceuticals and construction, though there are no strong sector biases.

Fund facts: Reliance Growth was launched in October 1995. The fund manager is Mr Sunil Singhania.

More Stories on : Mutual Funds | Mutual Funds | Recommendation

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Financial planning: Meeting your goals

India Inc’s blind date with derivatives

Though MFs have shown phenomenal growth...
FIIs are still the kings

Reliance Growth: Invest in phases

Tata Equity Opportunities Fund: Invest

Lupin: Buy

HEG: Buy

B L Kashyap & Sons: Buy

Infosys Technologies: Buy

Index Outlook