The Hindu Business Line : Reliance Vision: Hold

Unit holders can retain their holdings in Reliance Vision based on its long-term track record. Despite sporting a large-cap tilted portfolio, the fund has failed to contain downside in a highly volatile year.

On a year-to-date period, the fund has seen its assets decline by 40 per cent, lower than the per unit NAV declined by 47 per cent, trailing large cap peers such as DSPML Top 100 and HDFC Top 200 by ten percentage points. Fresh exposures can, therefore, be avoided during this volatile phase.

The fund, however, has managed to beat the category average over a three and five-year period and still remains a good fund to hold over the long term.

Systematic investment plan works better during a falling market (when additional units cost less) rather than a rising market.

The three-year return under SIP is a negative 8.9 per cent as against 8.4 per cent generated by lump sum investment; this difference arises out of buying additional units at higher prices in the market rally on the last three years. Increase in asset size over the years also appears to have dragged the performance of the fund.

Traditionally, Reliance Vision has declared good dividends. Investors who had opted for the same over the past two years could have earned higher return (by encashing the profits) than those who opted for the re-investment and growth options.

Performance: Over a one-year period, fund has lost 46 per cent in value and marginally outpaced the benchmark BSE 100. Kotak 30, another large-cap fund, has contained downside better with a lower cash position. Reliance Vision’s highly-concentrated portfolio has turned the tide against it.

High exposure to stocks such as Reliance Industries, and ICICI Bank, which have corrected sharply over the last few months, has affected the performance. Low exposure to defensive sectors such as consumer non-durables could also partly explain the under-performance.

Portfolio overview: The fund had 23 stocks that accounted for 95 cent of the portfolio. As part of 5 per cent of the assets in stocks with weights of less than 1 per cent.

The top three sectors, banks, pharma and auto, together accounted for 25 per cent of the portfolio. The fund is very active in churning its portfolio; as the markets continue to witness a highly volatile phase it has gradually increased its cash position to 27 per cent of assets.

As a contrarian holding, the fund held sizeable exposure to auto stocks.The fund was launched in 1995 and is managed by Mr Ashwani Kumar. The NAV per unit is Rs 139.

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