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K.Venkatasubramanian

Investments by way of SIP (systematic investment plan) with a long-term horizon may be considered in Reliance Growth Fund, considering its track record in delivering consistent returns.

The fund has comfortably beaten its benchmark — the BSE 100 — on one, three and five-year annual returns.

Reliance Growth has performed extremely well during market upswings, but does not tend to contain downsides better than the benchmark during bearish market phases, especially if the downtrend is prolonged.

The fund may be a good diversifying strategy for investors with an appetite for risk. But this may not be suitable for the core portfolio of the investor, given the inherent fluctuation of returns from this fund. A SIP with a three-fiveyear horizon may, however, help ride out volatility. Lump-sum investment may require market timing, which may not be easy.

Performance: Reliance Growth has been among the top quartile of diversified funds by returns over several time periods. It tops the list on a five-year basis with 46 per cent annual returns. It has participated well during the bullish phases in the market beating its benchmark comfortably and has been in the top ten percentile of funds during such times.

But Reliance Growth has not been able to contain net asset value (NAV) erosion better than its benchmark or other diversified funds, especially in prolonged bearish phases such as the one in 2006 and now in 2008.

A SIP investment from its launch in 1995 would have yielded an annual return of 35.4 per cent, compared to 30.9 per cent that a lump-sum investment would have returned. For investors with a longer investment horizon, this fund may be good addition to the portfolio as a diversification strategy.

Strategy: Reliance Growth had in the past been a midcap-biased fund with over 40 per cent of the portfolio invested in such stocks. But in recent months, the fund has reduced mid-cap exposure to around 20 per cent levels. Exposure to large caps has been increased considerably.

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