Over the 1-year period ended August 10, 2010, three funds from Reliance Mutual Fund found themselves in the bottom quartile among all equity diversified funds. The three funds - Reliance Equity, Reliance Infrastructure and Reliance Natural Resources - have one thing in common. They collected humongous amounts of money during their launch period.
Reliance Natural Resources came out with its new fund offer (NFO) when the equity market was near its all-time high. It mobilised Rs.5,660 crore, the second highest amount mobilised by any equity fund ever. Even before the NFO was closed, the market crashed. Investors who bought into the NFO have barely gained since then. Its return since launch has been just 0.89 per cent (August 10, 2010). Currently, it is the worst performing fund with a return of 10.25 per cent over the 1-year period ended August 10, 2010. Interestingly, it delivered 73.35 per cent in 2009. Being a thematic offering, such volatility is expected.
Reliance Equity is the third worst performing fund over this period. The fund made history by collecting the largest amount ever during its offer period. Its assets are now down 66 per cent. Soon after its launch, the market fell and the fund has been unable to perform during the subsequent rallies. In 2007 and 2009, it delivered below average returns when compared with other equity diversified funds. Fortunately, it was able to shield its investor better during the market crash of 2008. This 2-star rated fund has delivered an annualised return of 10 per cent since its launch.
Reliance Infrastructure was launched last year, when market sentiment began to pick up. In this case, the poor performance is probably due to the woes of the infrastructure sector as a whole. But even amongst the other 14 infrastructure funds, it is the worst performer with a 1-year return of 16.38 per cent. On a closing note, it would nice to note that Reliance Opportunities is the best performing fund over the 1-year period with a return of 66.46 per cent.
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