Launched in March 2005, Reliance Equity Opportunities has performed reasonably well so far. Its two-year returns of 50.25 per cent (as on June 13, 2007) place it in the second quartile of the diversified equity category. Year 2006 was particularly good for the fund when it delivered 51.28 per cent, far ahead of the category's 35.69 per cent, to be placed in the top quartile.
The fund started off with a strong focus on large-cap, which it has gradually pared down in favour of mid-caps. Currently, the large-caps and the mid-caps have an almost equal weightage.
The fund is quite quality conscious- you would hardly find any unheard names among its top holdings. There are no signs of excessive churn either. Many of its top holdings have been there ever since.
There is fair amount of diversity as well. The allocation to top 5 holdings has barely crossed 25 per cent. Apart from Reliance Industries (which has been its top holding since the start, with an average allocation above 6 per cent), other stocks have rarely been allocated more than 5 per cent of the portfolio.
Moreover, like some of the other Reliance funds, this one too prefers to hold significant amount of cash (an average 7 per cent of the assets over the last one year).
Therefore, if you thought it to be an opportunities fund which will build positions aggressively in specific stocks based upon some trigger or an event, and quickly exit after making its cut of profits, then this one would leave you disappointed.
On the contrary, if the way it has been managed and the kind of performance it has delivered in these initial years is anything to go by, then this one might emerge as a suitable core holding at some point of time in future, with a longer and consistent track record of performance.
This article was originally published on July 16, 2007.
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