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Focused Yet Impressive

Reliance Quant Plus selects stocks based on a mathematical model, which has shown good results till now…

The nice thing about this fund is its simplicity. Even better is its returns.
Reliance Quant Plus Retail focuses on the constituents of the Nifty, which are 50 stocks. However, don’t mistake it for an index fund. This is a concentrated equity portfolio actively selected from a very limited universe. The equity component varies between 90-100 per cent of the portfolio, the balance in debt and money market instruments. This fund uses a quant model to shortlist around 15-20 stocks from the 50-stock universe of the Nifty but the final decision on what must be included and in what weightage is purely the fund manager’s call.

The mathematical model does the basic stock selection based on broadly four parameters- valuations (1-year Forward Earnings, Book Value, Price Earnings Growth), earnings (earnings momentum, growth, recommendation change), price (Relative Strength Index, price momentum, overbought, oversold) and quantity (Return on Equity, market capitalisation, liquidity, volatility).
The screening takes place at a pre-determined time, which is on a weekly basis. Since the universe is limited to just 50 stocks, this fund targets investors seeking capital appreciation and growth vis-à-vis the Nifty. Its basic aim is to outperform the Nifty in all market conditions.

In 2009 it barely managed to beat the Nifty. In 2010, it did a much better job. Even within its category it was a top quartile performer. Its 1-year and 2-year returns put it ahead of the Nifty and category average while its current returns indicate that it has not fallen dramatically and again has outdone both. In its best 1-year period, it delivered almost 100 per cent (March 9, 2009 - March 11, 2010) and in its worst it fell by (-) 26.79 per cent (April 28, 2008 - March 28, 2009). We have no grouse with this fund. However, its annual track record only spans bull runs. The fund originally was launched in 2005 as Reliance Index Fund. The key features of this fund along with its name were changed in April 2008. If we look at its quarterly returns in 2008, it did fall less than the category average in the last two quarters that calendar year. Even this year the fund has able to curtail its fall to a slightly lower level than its category.

The fund has a concentrated portfolio of 15 to 20 stocks and the allocation to a single stock can touch 10 per cent, though the large-cap bias mitigates the risk. This fund is for investors who want to invest in the largest and best companies without being limited to an index fund.

The fund discloses full portfolios semi-annually