Focused on Growth | Value Research Ashwani Kumar, co-manager, Reliance Tax Saver & Reliance Top 200, tells us about the bottom-up investing strategies of his funds...
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Focused on Growth

Ashwani Kumar, co-manager, Reliance Tax Saver & Reliance Top 200, tells us about the bottom-up investing strategies of his funds...



What is the investment strategy adopted in managing Reliance Tax Saver?
The fund uses the bottom-up stock picking strategy, with 40 to 50 per cent of the corpus invested in BSE 100, with the rest from outside the BSE 100 index. The focus is on investing in high-quality growth stocks across market caps. The time-frame of investments is 2-3 years. The outcome of this strategy has resulted in 35-40 per cent of investment allocation in MNC stocks or in Indian companies that have a joint-venture with a foreign company. This fund has a focused portfolio where the top-30 stocks form 75-80 per cent of the total portfolio. In 2012, this fund avoided IT and commodity stocks and benefitted from growth in domestic consumption and industrial growth.

How differently do you manage Reliance Tax Saver compared to Reliance Top 200 fund?
Reliance Tax Saver fund is focused on large- and mid-cap stocks, whereas Reliance Top 200 fund is focused on the top-200 companies by market cap or stocks that are part of BSE-200 index. Compared to Reliance Tax Saver, Reliance Top 200 is more diversified in terms of number of stocks in the portfolio. Moreover, being a 3-year lock-in fund, there is flexibility to take a long-term view and invest in stocks which can generate a high alpha over 2-3 years.

Does the 3-year lock-in and hence lower redemption play a role in building the portfolio in the Tax Saver?
By virtue of a 3-year lock-in period there is a greater flexibility to take a longer term call, particularly in case of mid-cap growth companies. Lock-in period also helps investors as the focus shifts from day to day volatility. There is no temptation to redeem the investment at an inappropriate time. In a growth economy like India there might be short-term issues but there is long-term growth. The benefits of long-term investment are demonstrated by strong performance in our fund.




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