Skip to main content

Mutual Fund Review: Reliance Equity Opportunity Fund

 

LAUNCHED in March 2005, Reliance Equity Opportunity Fund's objective enthused investors initially and so the fund managed to mop up more than 2,000 crore of assets under management (AUM) soon after its launch. However, the erratic performance of the fund has diminished its glory over the years.

PERFORMANCE:

Reliance Equity Opportunity has had a very crooked performance graph. The fund started off on a good note and became a top quartile performer in 2006.

 

   However, in the next two years, it failed to impress and underperformed the major market indices as well as the benchmark. In 2007, when market indices were at their peaks, the fund returned just about 47% against 60% by the benchmark BSE 100. In 2008, it fell more than the market indices and benchmark. When the market began to rally in 2009, the fund manager didn't seem to change the conservative investment strategy. The cash holdings continued to be more than 15% through the second quarter of 2009, thereby hampering the returns in the first half of the year. However, the fund manager made up for this lag in the second half. The fund generated an overwhelming return of 109 % as against 81% and 75% return by the Sensex and the Nifty, respectively. In 2010, the fund continued its electrifying performance as it generated as much as 30% return, which was double the return generated by the Sensex and the Nifty.

PORTFOLIO:

Reliance Equity Opportunity Fund is an opportunity grabber. The fund has the leeway to invest in both domestic companies and stocks listed outside India. There is no sector bias, nor any market capitalisation tilt for this fund, which comfortably holds 33 stocks as of January 2011.


   It started off with a focus on large-cap companies but gradually moved to smaller companies making it riskier when compared to other equity diversified funds. Currently, the top three sectors of the fund are services, financial and technology. Interestingly, the fund has an even mix of both conventional and nonconventional stocks. In service sector, the fund has invested in Trent, Shoppers Stop, Cox & Kings, Hindustan Media Ventures and Dish TV. In the healthcare space, it holds Divi's Laboratories and Aventis Pharma.


   Reliance Industries, which was an alltime favorite stock of the previous fund manager, no more finds space in the portfolio ever since the fund been taken over by its new manager. Some other stocks that were unique to Reliance Equity Opportunity Fund including Unichem Laboratories, Piramal Life Sciences, Hinduja Venture and Micro Ink are deleted from the portfolio.


   A few stocks that have been a part of the portfolio for more than three years now include ICICI Bank, SBI, Cummin India and HCL Technologies among others. The fund follows a buy-and-hold strategy and hence, the portfolio churning ratio of the fund is as low as 0.79 times. This is unlike a mid and small-cap fund, which generally requires more churning to generate additional returns.

OUR VIEW:

Notwithstanding its patchy performance record, the fund has been able to generate good returns. However, exposure to small and mid-cap companies increases the fund's risk quotient. The fund is suitable for investors looking for high returns at high risk.

 

Popular posts from this blog

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...

Myths about Exchange Traded Funds (ETFs)

1) ETFs Are Similar to Individual Stocks: Like MFs, ETF consist of an underlying portfolio of securities that's designed to follow a specific index or investment strategy. Hence, they are as diversified as various mutual funds. 2) ETFs Only Invest in Equity: Since they are listed on the exchange, the general belief is that ETF only consists of equity asset class. Globally, ETFs are available across asset classes – equity, debt, commodities, real estate and so on. In fact, over the past couple of years, India has also seen the emergence of Gold ETFs. 3) All ETFs Are Index Funds: ETF started as a fund which used to track indices and hence they were branded as index funds that are listed. However, ETFs have progressed rapidly and are no longer associated only with passive index funds. Globally, we have seen the launch of actively-managed ETFs. In India, also we recently saw the emer gence of fundamentally-weighted ETFs on Nifty, which busts the myth that ETFs are index funds and can...

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...

Reliance Health Total

  Reliance Life Insurance has launched Reliance Health Total, a non-linked, non-participating and non-variable health insurance plan . It provides a fixed benefit cover for hospitalisation, critical illnesses and surgeries. The customer can also make a claim for over-the-counter health-related expenses. This is a regular-pay, five-year plan that can be renewed till the age of 99. The plan comes with two options: customers can choose a higher medical reimbursement benefit or a higher sum insured. Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver 8. IDFC Tax Advantage (ELSS) Fund 9. Axis Tax Saver Fund 10. BNP Paribas Long Term Equity Fund You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds Invest in Tax Saver Mutual Funds Online - I...

REC Tax Free Bond Issue

Tax Saving Mutual Funds Online Current open Infra Bond Application form   Download REC Tax Free Bond Application Forms REC (Rural Electrification Corporation) is going to issue tax free bonds and the issue will open on March 6 2012 and will close on the 12th of March 2012 When you buy 80CCF infrastructure bonds, the amount you invest in those bonds get reduced from your taxable income but in these bonds that's not going to be the case. The interest on these bonds will be tax free and they are similar to the other tax free bonds like the HUDCO, NHAI and PFC issues. For the two of you interested in knowing this – these bonds are tax free under Section 10(15)(iv)(h) of the Income Tax Act. Now on to the issue itself and let's start with the high credit rating that the issue has got. The REC tax free bond issue has been given the highest rating by all issuers since the government owns the majority stake (66.8%) in REC, it has been consistently profit making,  this is a se...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now