markettrend766
29-11-2009, 08:56 PM
Investors with a taste for risk can consider Reliance Growth Fund. The fund has comfortably outpaced its benchmark BSE 100 as well as the more broad-based BSE 500 over an extended period.
However, given its growth-oriented style of investing, its returns over shorter time frames tend to be volatile. Investments, therefore, can be made in phases by way of SIPs.
Performance and strategy: Reliance Growth's burgeoning asset size may have prevented the fund from navigating the less liquid areas of the market, but this hasn't kept it from outpacing both its benchmark and the Sensex in returns.
Over one-, three- and five-year periods, it has returned about 99 per cent, 15 per cent and 32 per cent respectively. It also fares favourably against BSE 500, a rather difficult index to keep pace with.
But how did the fund measure up during market corrections?
During the protracted market correction between January 2008 and March 2009, the fund managed to arrest its NAV fall to 49 per cent, in line with its benchmark. Its well-timed cash calls and sector choices, besides a fairly diversified portfolio, appear to have come to its aid.
The fund's allocation to cash from June 2008 to March 2009 averaged at about 28 per cent of its overall portfolio — a rather significant chunk if we consider its large asset size.
While this helped during market declines, the high cash exposure seems to have kept the fund from participating in the initial leg of the present market rally. However, a good number of funds missed the rally as well. To put it in context — only about one in four equity funds managed to outpace the Sensex between the March lows and mid-May 2009. Most funds, including Reliance Growth, gathered pace later.
Portfolio: Like we said earlier, the fund's portfolio is fairly diversified, so much so that no single stock has held more than 5 per cent weight over the last many months. In its latest available portfolio, while large-cap stocks accounted for 39 per cent, the mid- and small-caps constituted 15 per cent and 12 per cent respectively.
On this note, it is important for investors to know that Reliance Growth was for long positioned as an aggressive mid-cap biased fund. Given its large asset size and liquidity issues associated with taking exposures to mid- and small-caps, the fund may no longer mimic the high-risk, high-return profile of midcap funds.
However, given its growth-oriented style of investing, its returns over shorter time frames tend to be volatile. Investments, therefore, can be made in phases by way of SIPs.
Performance and strategy: Reliance Growth's burgeoning asset size may have prevented the fund from navigating the less liquid areas of the market, but this hasn't kept it from outpacing both its benchmark and the Sensex in returns.
Over one-, three- and five-year periods, it has returned about 99 per cent, 15 per cent and 32 per cent respectively. It also fares favourably against BSE 500, a rather difficult index to keep pace with.
But how did the fund measure up during market corrections?
During the protracted market correction between January 2008 and March 2009, the fund managed to arrest its NAV fall to 49 per cent, in line with its benchmark. Its well-timed cash calls and sector choices, besides a fairly diversified portfolio, appear to have come to its aid.
The fund's allocation to cash from June 2008 to March 2009 averaged at about 28 per cent of its overall portfolio — a rather significant chunk if we consider its large asset size.
While this helped during market declines, the high cash exposure seems to have kept the fund from participating in the initial leg of the present market rally. However, a good number of funds missed the rally as well. To put it in context — only about one in four equity funds managed to outpace the Sensex between the March lows and mid-May 2009. Most funds, including Reliance Growth, gathered pace later.
Portfolio: Like we said earlier, the fund's portfolio is fairly diversified, so much so that no single stock has held more than 5 per cent weight over the last many months. In its latest available portfolio, while large-cap stocks accounted for 39 per cent, the mid- and small-caps constituted 15 per cent and 12 per cent respectively.
On this note, it is important for investors to know that Reliance Growth was for long positioned as an aggressive mid-cap biased fund. Given its large asset size and liquidity issues associated with taking exposures to mid- and small-caps, the fund may no longer mimic the high-risk, high-return profile of midcap funds.