Reliance Small Cap: Deploying cash back in equities

Over the last one year, Reliance Small Cap contained declines better than its benchmark, BSE Small Cap index. The fund fell 11 per cent even as the benchmark index lost 25 per cent.

Debt, cash and other equivalents were 23 per cent of the total holdings a year ago but were drastically reduced to 6 per cent in April. What were the fund's sector and stocks choices when it moved such cash to equities?

Sector moves

The fund gradually upped stakes in sectors such as software and chemicals sector during the market declines in the last one year and reduced its cash holdings to 6 per cent in April. The fund increased its holdings in its top three sectors of industrial products, pharma and software respectively, of a year ago.

However, the weights given to these sectors changed; software, chemicals and industrial products, in that order, are the top sector choices.

Industrial products sector continued as the top sector until February but software has taken over since, with 14 per cent holdings. The fund axed its holding in industrial capital goods sector from 9 per cent a year ago to 3 per cent in April.

The chemicals sector saw a steady rise in holding from 5 per cent a year ago to 13 per cent in April. Interestingly, pharma remained among the fund's top four sector picks over this one-year period.

Stock moves

The fund has been consistently holding 38-40 stocks over the last one year but has been churning the portfolio. It dropped the stock of ABG shipyard, which was the fund's top holding until December, from the portfolio in February.

Another top stock, FAG Bearings India, took over as the top pick after ABG shipyard's exit. This stock delivered 37 per cent returns over the last one year. On the other hand, holdings in Biocon, the fund's third top holding until six months ago, were pared and the stock moved out of the top ten holdings. This stock has declined steadily by 41 per cent in the past one year.

The fund increased its holding in the stock of Strides Arcolab, from 2 per cent six months ago to 4 per cent in April.

During this period when the fund increased holdings, the stock delivered 70 per cent returns. The fund also upped its stake in MRF from 2 per cent six months ago to 4 per cent in April. Stocks of NIIT and Zydus Wellness entered the portfolio in the last three months and found their way in the top ten holdings.

Kirloskar Brothers Investments, Setco Automotive, JBF Industries and Power Finance Corporation were some of the other stocks that exited the portfolio.

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