The fund’s one-year returns of around 66.52% are not only better than the benchmark BSE 100’s returns of around 35.49% but also better than equity diversified category.
Reliance Regular Savings Fund - Equity is an open-ended equity diversified scheme launched in 2005 with a primary objective “to seek capital appreciation and/or to generate consistent returns by actively investing in equity/equity-related securities.”
And active it has been. The fund in the last two years has had one of the most inconsistent portfolios without any significant core holdings.
The fund has been sporting a portfolio of around 20-30 stocks and it’s only in the past few months, the fund has held bigger portfolios mainly because of huge increase in asset under management.
The point here is that for composing its portfolio, for the last two years, the fund has had exposure to around 120 stocks and out of these stocks only few have been held for more than a year. This indicates that the fund has been churning its portfolio very regularly.
This has worked for the fund as it has been able to generate higher returns from the bull-run. The fund’s one-year returns of around 66.52% are not only better than the benchmark BSE 100’s returns of around 35.49% but also better than equity diversified category’s average returns of around 31.04%.
Though the fund’s strategy has been fruitful in its final outcome, the same has been very risky in its application. The fund’s returns have been very volatile for the last two years and the fund has just been able to beat the benchmark on risk-adjusted returns parameter by a slight margin.
Also, on the portfolio front the fund has been sporting a slightly concentrated portfolio and at points the top five stocks in the portfolio have accounted for more than 30% of the total corpus.
Though risky, this has been the feature of the fund which has maintained a short portfolio with substantial weights to every stock in the portfolio.
In the current portfolio, the top five stocks are Pratibha Industries Ltd (8.64%), Indiabulls Financial Services (5.22), Reliance Industries (4.58), Divis Laboratories Ltd (3.91) and Bharat Heavy Electricals Ltd (3.81).
For the fund, the top five stocks have been changing and the current list is not congruous with the previous portfolios.
The fund is currently bullish on construction and capital goods sector and in the last two years auto, pharmaceuticals and software sector has had majority of the fund’s corpus. These sectors in the last few months have seen major allocation cut and currently accounts for very minimal percentage of the corpus.
The fund has been in existence for slightly less than three years and in this short span of time it has performed well and has been able to capture most of the higher returns generated in the stock markets
By arrangement with mutualfundsindia.com,a unit of Icra Online
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