VR Logo

Size No Bar

Growth has maintained to hold its position as the largest mid-cap fund despite a dip in performance. The year has been impressive for the fund as well, and things seem positive in the new year

Though last year it witnessed a dip in the performance rankings, its track record prior to that was enviable. In this regard, it is worth momentarily comparing it with Sundaram Select Midcap which topped the performance chart in 2006.

But Sundaram BNP Paribas Select Midcap is seeing its assets dip while this fund has seen them rise from Rs 3,776 crore (May 2007) to 4,617.19 (September 2007), keeping it intact in its position as the largest mid-cap fund. With mid-cap funds, size is an issue. The bigger the size, the more restricting it is for the fund manager to take aggressive positions in small stocks. This fund manager must be commended for his handling of the fund. He has not taken diversification to the extreme by flooding the portfolios with stocks and neither has he held phenomenally high cash positions.

The fund has an ability to adapt to market movements. In a rapid bull run, it will look at growth stocks, not value. In a slower market, it will change its stance. This flexibility is extended even in the preference for market cap. If the need be, Growth will increase its large-caps substantially. Currently, large-caps are at around 37 per cent. Reliance Growth is basically a pro-active fund that regularly churns out fresh ideas. The fund does not churn its portfolio rapidly and adheres to a buy-and-hold strategy as far as possible.

Though last year it outperformed the category average, it was not a top-quartile performer. This year has been impressive.

Till date, the huge asset size has not hindered returns. But it remains to be seen whether it will.