Reliance Capital Asset Management Company (AMC) has made admirable strides since its launch in June 1995. Starting with only two equity funds, the AMC was relatively an ignored fund house till late 2000. Its assets touched Rs 1,000 crore mark only in November 2000. However since then, the AMC's fortunes have taken a turn for the better.
Reliance's growth story gathered momentum in December 2000 on the back of a five-fold rise in its liquid assets. However, lack of support from the equity and debt side proved to be a hindrance till late 2002 when its assets under management hovered between Rs 1,100 to Rs 2,900 crore.
Things changed for the better from October 2002. By the end of the first quarter of 2003, the fund house had started to make its presence felt-occupying twelfth position with a market share of 3.11 per cent. The next two fiscal years clearly belonged to Reliance Capital. At present, the fund house manages 6.05 per cent assets of the Indian mutual fund industry and only five AMCs are ahead of it. Good performances by some of its funds and a strong brand have helped the AMC achieve this feat.
Products and Strategies
The product basket is not yet complete at Reliance Capital AMC. Tech fund and balanced funds are missing. The fund house has just launched a tax-planing equity fund. However, the AMC offers some good equity, sector and debt funds.
Its two equity funds, Reliance Vision and Reliance Growth, are among the best in the category. Launched simultaneously in October 1995, both Vision and Growth were India's first no load funds. Now, the two funds charge an entry load.
The AMC had launched Reliance Growth as a seven-year closed end fund. However, it converted the fund into an open-end fund in late 1999.
Both the funds have a commendable performance record-in trailing three- and five-year periods, they find a place in the top five funds in the category.
Reliance Growth, predominantly a mid-cap fund, has delivered a whopping 30.89 per cent since launch. The fund has a well-diversified portfolio but it is not a conventional diversified equity fund due to a heavy mid- and small-cap bias, high turnover and high cash component. While it cannot be your core holding, it can definitely add some spice to your portfolio.
Reliance Vision is not too far behind in performance. Predominantly a large-cap fund, it has rewarded its investors with a return of over 25 per cent since launch. Few funds can boast of such long-term performance. The fund has never shied away from shuffling its portfolio between large-caps and mid-caps to boost performance.
Reliance Capital AMC has many firsts to its credit. Apart from launching the first no-load fund, the fund house introduced a pure banking fund to the Indian investors in May 2003. So far, it has put up an outstanding show-a 61.45 per cent return since launch. Last year, it surged a whopping 57.92 per cent to comprehensively beat the 32.97 per cent return of the benchmark BSE Bankex. Those who understand the sector well would like this fund.
Reliance is also the first AMC to launch a media and entertainment sector fund, which has started off well. Launched in September last year, the fund has so far generated over 20 per cent return.
Another first includes a power sector fund. It aims for capital growth through investments in companies associated with the power sector. Launched in April last year, the fund has justified its presence by growing investors' capital by a massive 63.13 per cent in the trailing one-year period ending June 10, 2005.
While the fund house launched these "unconventional" sector funds one by one, it's still to introduce a technology fund. In fact, the AMC did plan to launch a technology fund in 2000 and an offer document was also filed with SEBI. But the plan was aborted.
On the debt side, the fund house had nothing to offer till late 1997. However now, the debt basket is more or less complete. It offers a decent low cost and stable income fund in Reliance Income.
Its cash fund, Reliance Liquid Treasury, is one of the best options available in the category for its quality portfolio and surprisingly low expense ratio (0.18 per cent as compared to its peers' average 0.62 per cent). Its short-term debt fund is similar-a combination of low cost and high returns makes it one of the best options for short-term needs. Reliance MIP too is a decent offering.
A Landmark
Reliance Capital AMC experienced its greatest success in March this year when Reliance Equity Opportunities Fund mopped up a massive sum of Rs 1773.50 crore to become the second largest IPO collection by any open-end equity fund. It also became the second largest equity fund by replacing vintage funds like Franklin India Prima and Franklin India Bluechip. The fund received over 2.2 lakh applications from over 130 centres across the country.
While a strong brand recall helped the fund house, it won't be wrong to say that Reliance Vision and Reliance Growth funds actually collected the amount for the AMC.
The Road Ahead
Two established equity funds, the recent IPO success, a decent basket of debt funds and expanding cash assets all put Reliance Mutual Fund among the front-runners in the Indian mutual fund landscape.
By launching products like power sector, media and entertainment, and banking funds, Reliance Capital AMC has established itself as an innovative fund house.
This article was originally published on July 22, 2005.
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