Of course, a strong rally in banking stocks has helped. The fund has an annualised return of 64 per cent since launch as against a 54.90 per cent return of BSE Bankex in the same period.
Reliance Banking started at a good time, when the equity markets were just starting to gain serious strength. Banking stocks too were about to see one of their best times. Reliance Mutual Fund seized the opportunity and launched this fund. Since then the BSE Bankex has had little difficulty in moving ahead. Reliance Banking has matched this momentum, outpacing the index by good margins on several occasions. The fund generated 53.78 per cent return in the first year of its launch.
The next year proved to be a landmark for the fund. It capitalised on the extended equity markets rally in 2004 and raced to return a whopping 58 per cent, substantially better than the 33 per cent gain of the BSE Bankex. Interestingly, this was the third best equity fund of last year behind Magnum Contra and Magnum Global.
In the first eight months of 2005, Reliance Banking has done reasonably well. Though it's not as hot as some of the diversified equity funds, its 26.65 per cent gain is better than 20.54 per cent rise in the BSE Bankex.
Starting with a large-cap portfolio, the fund manager has shuffled assets between large-, mid- and small-cap stocks frequently. The fund earned huge returns in 2004 on back of a mid-cap tilted portfolio. This year, though, the focus has shifted back to larger companies.
The fund had started off with a concentrated portfolio. Till late last year, six to eight stocks used to form the portfolio. This has changed now and with assets spread across 14 to 17 stocks, the fund looks well-diversified.
As expected, SBI has always dominated the portfolio. Except for rare occasions, the stock has remained the top holding of the fund since launch--at times occupying nearly a quarter of the portfolio.
Like all sectoral offerings, this fund is risky as well. Investors here should aim for the long-term.
This article was originally published on October 27, 2005.
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