Loads of Energy

Reliance Diversified Power Sector is going great guns. It clearly looks slated to be the best performing equity fund of last year. As on November 30 , 2007, its one-year return was 109.38 per cent, as against the Sensex return of 58.18 per cent. We spoke to the fund manager, Sunil Singhania, about the fund and his views on the power sector. What has contributed to the spectacular performance of this fund? A number of factors actually. The bullish market has helped. The power sector in general has performed well. To move to specifics, our disciplined approach. We have been very focused. This fund boasts of a very high-quality and stable portfolio. We have picked up stocks doing our own research. The Torrent Power stock has been an eight bagger for us. Kirloskar Brothers, Jindal Steel & Power, Jaiprakash Associates and Areva T&D India are stocks that we bought much ahead and at times where there was no external research on those stocks available. A lot of in-house research has gone into stock selection. We have had our share of misses. We booked profits in some stocks a little too early. Power Grid, Power Finance and BHEL are some examples. But that does not worry us. It is part and parcel of the game. The performance is very noticeable. But what index are you benchmarked against? Is it available in the public domain? Since this is a sector fund, it obviously has to be benchmarked against a relevant index. Today, we have the BSE Power Index. But when we launched this fund a few years ago, there was no benchmark index. Since an index is mandatory for a mutual fund, we requested IISL*, a joint venture between NSE* and CRISIL* to create a specific one for us. So we are benchmarked against the India Power Index which has been created and is maintained by them. What is the strategic and tactical orientation of the Power Sector Fund? We have flexibility to be fully invested in equity or debt or even cash. We do not have any market capitalisation bias. The mandate is that we can invest in any power-related companies. Be it power generation, transmission or utilities and even power equipment companies. We can also invest in companies that are predominantly exposed to the power sector. Can you give some examples of such companies exposed to the power sector? Jindal Steel and Power, where the bulk of its valuation comes from the power business. This has been the same with Jai Prakash Associates where a major part