Reliance Mutual has a history of letting its funds get bloated in terms of AUM. And, the firm’s culture places a premium on running a big fund.
Ever since its start in 1995, the AMC has rapidly increased its AUM. From being India’s largest private sector mutual fund in 2006 it went to being the largest mutual fund by 2007. Reliance Equity Advantage fund created history by mopping up Rs 2,700 crore in its NFO in 2007. This year Reliance Natural Resources Retail mopped up Rs 5,660 crore.
Reliance has managed to garner huge amount of assets because it actively pursues NFOs. The fund house started with the launch of two equity funds–Reliance Vision and Reliance Growth. It’s the performance of these two funds in 2002 and 2003 that made the fund house a hit with investors.
The fund house leveraged this along with the Reliance brand to gain investors’ attention. In three years (February 2005 - January 2008), five of the equity launches lost money. The total NFO collection was Rs 17,960 crore which is now down by more than Rs 6,000 crore to Rs 11,488 crore.
However, having a huge asset-base may not be an advantage in every situation. The large size of its funds have sometimes worked against it. Its mid-cap offering, Reliance Growth, is huge with Rs 4,337 crore. Reliance Diversified Power Sector manages Rs 4,521 crore and Reliance Natural Resources Rs 4,346 crore. And managing investor expectations will not be easy either.
The AMC has many firsts to its credit among sector funds: Banking, media and entertainment, power. This year it came out with a Natural Resource Fund. On the debt side, the fund house has good, low expense ratio funds like Reliance Short Term and Reliance Liquid Treasury.
Though the fund house barely has a presence in the hybrid category, it does have a huge choice in the types of funds with some good performers.
Ever since its start in 1995, the AMC has rapidly increased its AUM. From being India’s largest private sector mutual fund in 2006 it went to being the largest mutual fund by 2007. Reliance Equity Advantage fund created history by mopping up Rs 2,700 crore in its NFO in 2007. This year Reliance Natural Resources Retail mopped up Rs 5,660 crore.
Reliance has managed to garner huge amount of assets because it actively pursues NFOs. The fund house started with the launch of two equity funds–Reliance Vision and Reliance Growth. It’s the performance of these two funds in 2002 and 2003 that made the fund house a hit with investors.
The fund house leveraged this along with the Reliance brand to gain investors’ attention. In three years (February 2005 - January 2008), five of the equity launches lost money. The total NFO collection was Rs 17,960 crore which is now down by more than Rs 6,000 crore to Rs 11,488 crore.
However, having a huge asset-base may not be an advantage in every situation. The large size of its funds have sometimes worked against it. Its mid-cap offering, Reliance Growth, is huge with Rs 4,337 crore. Reliance Diversified Power Sector manages Rs 4,521 crore and Reliance Natural Resources Rs 4,346 crore. And managing investor expectations will not be easy either.
The AMC has many firsts to its credit among sector funds: Banking, media and entertainment, power. This year it came out with a Natural Resource Fund. On the debt side, the fund house has good, low expense ratio funds like Reliance Short Term and Reliance Liquid Treasury.
Though the fund house barely has a presence in the hybrid category, it does have a huge choice in the types of funds with some good performers.
