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On A Roll

After riding the mid-cap rally in 2002 this fund is now looking at large-caps once again

After spending years in the second quartile of its category this fund has burst into the first quartile thanks to a sterling performance. A whopping 74.58 per cent return in 2002 made Reliance Vision the top fund last year. This has been achieved through heavy investing in mid-caps and avoiding large-caps when their relative performance hasn't been very impressive.

By nature, this fund scouts for companies with sound fundamentals, irrespective of whether they are small-caps or large-caps. Although mid- and small-cap stocks have ruled Reliance Vision's portfolio, the fund has managed risk quite effectively through diversification. Except during the tech-led rally of 2000, the fund's exposure to a single sector has never crossed 17 per cent. But for initial years, its single stock holding has never gone beyond 10 per cent of total assets. At present, the biggest holding, SBI, accounts for just 3.3 per cent of total assets.

In 2001, Reliance Vision was an average performer. Exposure to large-cap FMCG, healthcare and construction sector stocks like Nestle, Cipla and ACC failed to guard its losses. However, in 2002, it once again took to mid-caps. This coincided with the mid-cap rally. The fund's substantial exposure to stocks like Bharat Forge and Bharat Electronics helped it deliver ballistic returns through 2002. Interestingly, during the dull phase of 2002 (February-October) it put up an amazing performance. While the category was down 12.6 per cent, Reliance Vision gained 21.4 per cent. It was one of the three funds, which generated positive returns in this period. In 2003, since bank and healthcare stocks have done well so far, the fund manger is bullish on them. Instead of following a buy-and-hold strategy, Reliance Vision believes in booking profits whenever the opportunity arises. Thus, its portfolio turnover has been on the higher side.

Reliance Vision, however, doesn't have a fixation for mid-caps. With large-caps making a comeback the fund is courting them again, by taking a sizeable exposure. In a nutshell, Reliance Vision largely focuses on spotting companies that offer good value. In the absence of such companies, it doesn't hesitate to sit on cash. Long-term growth aficionados who can handle risk will find Reliance Vision palatable.