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Reliance Growth Fund

Dhirendra Kumar

Reliance Growth Fund, launched as a seven-year close-ended scheme, was converted into an open-ended fund in September 1999. The fund is available at a 2 per cent entry load, while redemption is at net asset value (NAV). In its dividend option, the fund paid its only dividend of 100 per cent in March 2000.

Reliance Growth Fund has given an annualised return of 23.7 per cent since launch with a large part of the gains being in the past calendar 1999 - during which the fund was up 198 per cent. The fund gave these returns with an overly diversified portfolio and with a software allocation which till November 1999 was a mere 16 per cent of the net assets. The fund had quite a few multi-baggers across large, mid and small cap stocks.

However, over the last six months, the fund has significantly increased its exposure to the infotech sector. Nevertheless, within the sector, the fund compromised on the quality substituting all the frontline stocks with the second rung category. As on March 31, 2000, the fund has a 35 per cent allocation to software comprising of only second rung stocks. The fund also has 9 per cent each in telecom and pharma, 4 per cent in diversified companies and 3 per cent in shipping.

Having strayed away from quality stocks within the software sector, the fund had to pay the price with a 47 per cent decline in the recent carnage on the bourses triggered by the ICE meltdown. The sharp fall, despite a diversified portfolio with top 10 stocks constituting only 39 per cent of the net assets, is nothing surprising for the second rung stocks in infotech sector, as are featured in the portfolio, were the worst hit. The fund currently has quite a few beaten down stocks. Though it might have been more than once successful in its stock picking strategy, the mid and small-cap stocks increase the downward risk.

Launched in September 1995, when the markets were in a strong bear grip, the fund for long had a sizeable allocation to debt. The strategy worked well in its favour enabling it to comfortably weather the bearish phase dipping far less than the markets. But, this resulted in the fund trailing the indices during the rising markets. However for over a year now, the fund has gradually increased its equity stake from a low of 35 per cent in March 1998 to 76 per cent in September 1998 and is almost fully invested in equities now.

Fund Basics
Objective	Size (Rs cr)	NAV (in Rs on 30/5/2000)	Exit price (Rs)	Entry price (Rs)	Total Returns (%)
Growth	69	26.94	26.94	27.48	23.7%
Benchmark Comparisons (%)					26/5/2000
	1M	3M	6M	1Yr	3Yr
Fund	-18.2	-44.8	-9.2	39.0	32.6
Sensex	-14.8	-27.4	-13.2	2.8	3.3
Nat. Index	-21.6	-41.9	-11.4	15.4	7.5
Obj. Avg.	-14.4	-38.5	-12.7	25.7	16.2
Top Holdings (31/3/2000)					Net Asset (%)
Himachal Futuristic					8.93
Compucon Software					4.80
Fortune Informatics					4.20
Reliance Industries					3.75
Frontier Information					3.68
Odyssey Technologies					3.21
Karuturi.com					3.08
Peerless Shipping					2.77
Samtel Color					2.57
Jupiter Orga					2.44
Morepen Labs					2.36
Kopran					2.35
Kaashyap Radiant					2.31
Aurobindo Pharma					2.30
Logix Microsystems					2.13
Moser Baer					2.06
Dredging Corp					1.92
CyberTech					1.82
Tisco					1.69
Zicom Electronic					1.51

Source: Value Research

Mutual Funds

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