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The poor performance of the sponsor in an AMC has no direct link to the funds poor performance

The recent news about Sebi’s ban on Anil Ambani and his associates from trading is a cause for concern. To what extent will it affect Reliance Mutual Fund? Is it wise to stay invested in the various schemes of Reliance MF?
- Dr. P M Deshpande

Your concerns are valid and understandable. The Anil Dhirubhai Ambani Group (ADAG) of companies is the promoter of Reliance Capital, one of India’s leading private-sector financial services companies. Reliance Capital has interests in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking and other activities in financial services. The company is listed and has actively-traded shares on the leading stock exchanges.

The company is the sponsor of the investment management firm, Reliance Capital Asset Management Limited. Under statutory obligations, the trustee and the investment manager are incorporated under the Companies Act 1956 and regulated accordingly.

The news that you mention about the ADAG group does not impact the performance of mutual funds floated by Reliance Capital Asset Management. The funds offered by this company invest in a wide variety of stocks and not just in the stocks of the ADAG group. At the same time, the risks associated with mutual fund investing hold good for the funds belonging to this fund house, just as they do for funds launched by any other asset management company. There is no reason to exit these funds.

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