The last two years have been marvelous for Reliance Growth. After gaining 55.75 per cent in 2002, Reliance Growth is up another 117.78 per cent this year till December 1, 2003. It is also unique in the diversity of stocks, be it large- or small-cap, growth or value stocks--you will find everything in its portfolio. With such a strong performance, investors can take a look at it, despite its high portfolio turnover.
Though a major part of Reliance Growth's portfolio consists of quality stocks, it hardly sticks to anything for long. Even if it is HLL, Reliance or Tata Motors, the fund keeps on selling and buying at every rise or fall in their share prices. Thus, on occasions it gets out of stocks before realising any gain. The other thing about this fund is that it does not hesitate to be the only mutual fund to own a new stock.
It is also more partial to mid-caps than other diversified equity funds. And, in fact, this bias towards mid-caps since August 2002 till date has been the biggest contributing factor for the fund's excellent performance. The fund's mid-cap holdings like Polyplex Corporation, Jindal Steel, Ipca Laboratories and ABB have seen their prices surge manifold since then.
The fund has also made some smart sector moves. Post-9/11, the fund took a lead by keeping a higher exposure in the-then hot sectors -- PSU and technology. Then, it lost less in the subsequent bear phase of mid-2002 due to a low FMCG allocation. Following the recent rally in bank and auto stocks this year, Reliance Growth has increased exposure in its top holdings like Punjab National Bank and Hero Honda. However, it did not make most of the rally in energy stocks, which has got much attention in recent times.
The fund also has a habit of not being fully invested. Even in the current bull-run, it has maintained an average 17-per cent cash exposure, which could result in the fund missing opportunities. All in all, Reliance Growth has a well-diversified portfolio but it is not a conventional diversified equity fund due to a mid-cap bias, high turnover and the high cash component. Investors could get a higher return by taking some risk here. While it cannot be your core holding, Reliance Growth can definitely add some spice to your portfolio.
This article was originally published on December 02, 2003.
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