What is the investment strategy for the fund? (Including internal rules investment universe, capitalization orientation and on maximum cash allocation)
Reliance Top 200 Fund is a large-cap oriented fund which invests in companies whose market capitalization is within the range of highest & lowest market capitalization of BSE 200 Index. The fund attempts to invest in primarily in large-cap companies along with allocations to market leaders in smaller industries. Currently, over 80% of the fund is invested in the Top 100 companies by market capitalization.
We avoid cash positions in the fund beyond the normal operating cash requirements. Hence at most points of time, the fund is fully invested.
What are the essential attributes for the stocks to be in your portfolio?
Reliance Top 200 invests in large-cap companies and companies with large-cap capabilities. Businesses with long operating history, dominant industry standing and sustainable profitable growth form the key basis for selecting stocks for the portfolio.
Investment framework:
- Invest in market leaders
- Invest in companies with established business models
- Invest in companies with sustainable free cash flows
- High ROE or potentially high ROE companies
What kind of stocks never enters your portfolio?
The portfolio does not invest in Small cap companies or early stage business models or companies with a very short operating history.
What will you attribute the relatively consistent performance of your fund in recent years?
The consistent performance of the fund can be attributed to:
1. Focus on 'Value with Growth' rather than only Growth or Value plays.
2. Paying attention to valuation, implementing 'Growth at Reasonable Price' and not overpaying for growth.
3. Focus on buying on established businesses at reasonable valuations and industry leaders in an unfavourable cycle.
Any tactical miss you regret (not having, or not having enough or holding something) in your portfolio?
The fund has at all times maintained its focus on the core investment mandate without comprising on the risk management philosophy. In hindsight, there will always be opportunities which may appear to be relatively better however as long as the fund is able to register consistent top quartile performance and superior risk-adjusted returns, we believe the investors will be satisfied.
This article was originally published on October 17, 2017.
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