Fund review: Reliance Regular Savings Equity

Even in time of crisis, this fund stands tall and delivers

This one has a knack for turning the competition green with envy. In its short history, the fund has been subject to frequent fund manager changes, but has been fairly consistent in its performance. Launched in 2005, it impressed the very next year. Though it rode on a high in 2007 with a return of 93 per cent, way ahead of the category average, it did not fall off the cliff when the market plummeted in 2008.

The outstanding return of 2007 was mainly due to the last quarter’s performance. Fund manager Omprakash Kuckian took over in November that year and wasted no time in placing his bets. The portfolio took over a totally different complexion the very next month (December 2007). Exposure to Construction shot up to 28 per cent (from 15.43%). This was done by buying Pratibha Industries, which alone accounted for 13.12 per cent of the portfolio. Simultaneously, exposure to Engineering was yanked up to 18.50 per cent (up from 7.77%) while Financial Services lost its prime slot by dropping to 6.69 per cent (from 15.79%).

In these two months, exposure to large caps stood at around 20 per cent. The fund manager rightly deserved a pat on the back when his portfolio delivered 54.66 per cent (category average: 25.70%) in the quarter ended December 2007.

When the bears came to the forefront in 2008, Omprakash managed to stay grounded by resorting to cash (average: 20%), diversifying his equity portfolio (average: 32 stocks) and increasing the large cap exposure (average: 37%).

Between March 9, 2009 and July 31, 2009, this fund rallied with a return of 103.75 per cent and cash levels decreased. Yet, ironically, the cash exposure moved up 10.59 per cent in June to 20 per cent in July. “I was uncomfortable with the high valuations and stocks were longer cheap,” says Omprakash.

As per the July portfolio, the fund manager was betting heavily on Energy (17.19%) and Financials (11.62%). But he was well diversified on the stock level where the highest holding was not even 5 per cent. —Value Research

Source : Media