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Investors with a high-risk appetite can consider buying units of Reliance Regular Savings Fund - Equity (Reliance RSF Equity), despite its underperformance during a year. Returns of 24 per cent and 13.1 per cent, respectively, during a three- and five-year period, despite lower exposure to the market, favoured the consumer sector. This reflects the fund's ability in stock selection. The fund has also outpaced its benchmark BSE 100 by six percentage points.
Suitability : Being a multi-cap fund, Reliance RSF Equity has traditionally taken bets on mid- and small-cap stocks, to prop up returns. While such a strategy yielded returns in a bull phase, it has equally dragged performance during volatile markets. But in recent times, the fund has toned down its exposure to mid- and small-cap stocks and is now overweight on large-cap stocks.
Nevertheless, the fund's unpredictable performance during shorter time frames, of approximately a year, makes it unsuitable for investors, who cannot stomach volatility. Swings in the fund's performance can also affect the investors' overall portfolio returns. Investments can be made in small lots or through SIPS.
Performance : The fund's Net Asset Value lost 21.8 per cent during the last one year, against 17.2 per cent shed by its benchmark BSE 100. The fund could have posted better returns had it upped its exposure to consumer sector stocks, many of which delivered superior returns even in the down market from January till date. Its shift to large-cap stocks too, didn't help much this time, as many large-cap stocks have shed higher value than their mid-cap peers. These decisions, that caused underperformance in the short term, nevertheless appear to be prudent in a volatile market.
Portfolio overview: For a fund with a large asset size, Reliance RSF Equity has a very compact portfolio, and has in recent times been less aggressive in churning its portfolio. The fund hasn't taken concentrated exposure in stocks.
The top ten stocks accounted for 32 per cent of the assets. One-third of the portfolio accounted for stocks with market capitalisation less than Rs 7,500 crore. With banking stocks undergoing pressure on margins, the fund has gradually reduced its exposure to the sector in the past six months, although it remains in the top sector. The fund is managed by Mr Omprakash Kuckian.
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