- Editor Rating
- Rated 2 stars
- Reliance Growth Fund
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Reliance Growth Fund is an equity-based mid cap fund with 94.78 percent concentration in equities and 5.22 percent in debt and others. Let us know about the fund in-depth, the portfolio, the performance and whether we should buy, sell or hold it.
Basic information and costs
It is one of the oldest mid cap funds, launched on October 8, 1995. The AUM (Assets Under Management) size is Rs. 5,632 as on July 31, 2016. The minimum investment for Reliance Growth is Rs.5000 with the minimum being Rs.100. The expense ratio for this open-ended fund is 2 percent, there is an exit load of 1 percent if you redeem the fund before 365 days. From the point of risk, it is termed ‘moderately high’. The fund manager is Sunil B. Singhania, who has been managing the fund ever since 2004. The benchmark for this fund is S&P BSE 100.
Sector-wise, the top allocations are in finance (29.74 percent), chemicals (9.50 percent), engineering (7.69 percent), construction (7.28 percent) and technology (7.23 percent). The top holdings in its portfolio are ULP Ltd (6.32 percent), Axis Bank (5.33 percent), Aditya Birla Nuvo Ltd (4.43 percent), HCL Technologies (4.11 percent) and Muthoot Finance (3.67 percent).
The returns since launch has been 23.86 percent. From a 10-year perspective, Reliance Growth Fund has delivered 15.36 percent while the category average was 15.18 percent and S&P BSE 100 benchmark was 10.40 percent.
However, Reliance Growth Fund has not performed as well as it should, post 2008. If we look at 5 year returns, the fund has given 15.88 percent, while the category average is 19.31 percent. From a 3-year perspective, the fund has delivered 28.62 percent, while the category average is 34 percent. In the past one year, Reliance Growth Fund at 3.53 percent has fallen below the benchmark of 4.66 percent, the category average being 6.13 percent.
One cannot deny the fact that the fund has a history behind it, especially if you look at its performance since inception and during the 10-year period. Reliance Growth Fund was one of the best funds till 2007. When the markets crashed in 2008, the fund manager was quick in moving to cash but was not so swift in pushing it back when the markets improved.
The fund’s performance went downhill post 2007, where it performed sub par compared to 57 percent of funds in its category. By 2010, the asset size of the fund had become too big in absolute terms, for a mid cap fund. With the fund manager allocating a substantial portion of the portfolio to large caps, Reliance Growth Fund began to look more like a multi cap fund. The fund manager however has stated that he is looking towards restoring the fund to is true character by increasing the exposure to mid-caps again.
However, we feel that there are much better funds in its category that can give Reliance Growth Fund, a run for its money. There is an older fund, Franklin India Prima Fund, which launched in 1993, that has beaten Reliance Growth in a 1, 3, 5 and 10-year perspective, with 13.43 percent, 37.17 percent, 24.06 percent and 16.04 percent respectively. The other good picks that you can go for HDFC Mid Cap Opportunities, BNP Paribas Midcap Fund and UTI Mid Cap Fund.
Should I buy, sell or hold?
Since the fund is performing way below average, you can move on to better funds in the same category. Our recommendation – Sell.
Good Fund Manager
Good Fund House
Huge Fund Size
High Expense Ratio