Reliance Regular Savings Fund-Balanced is an equity-oriented hybrid fund with assets under management of Rs 539 crore as of May. It is ranked Crisil CPR-1 over the past four quarters ending March under the balanced funds category. The consistency in rankings is an indication of a blend of superior performance and disciplined portfolio management. Crisil CPR-1 ranked funds form the top 10th percentile of Crisil’s ranked universe.
Investment style
Reliance Regular Savings Fund–Balanced seeks the best of both worlds: to provide the capital appreciation of equities and stability of debt market instruments. The scheme is mandated to invest in the proportion of 50-75 per cent in stocks and the balance in fixed income securities. During the past three years, the fund has an average investment of 65 per cent in equities.
The scheme’s risk profile lies between diversified equity funds and income funds, and is suitable for investors who want to benefit from the stock market but do not have the appetite for volatility (medium-risk appetite). The fixed income component in the fund helps stabilise the returns by cushioning the fluctuations of equity investments.
Performance
The fund has capitalised on the equity market movement and outperformed the benchmark index (Crisil BalancEX) with a sizeable margin. The fund has returned over twice the benchmark index returns for various periods analysed (three months, six months, one year and three years). The fund’s performance stands out compared to its peers, especially during the recovery period of 2009. The fund’s NAV has multiplied 1.25 times from March 2009 till date, while the benchmark index gained 65 per cent and the S&P CNX Nifty gained 105 per cent. Further, the fund lost only 47 per cent of its NAV from January 2008 (market peak) till October 2008, compared to 44 per cent of the Crisil BalancEx and 60 per cent of the S&P CNX Nifty. Thus, it generated superior alpha during the uptrend and limited its downside to closely follow the benchmark index during the market fall.
Risk attributes
The fund’s impressive performance is, however, coupled by marginally higher volatility vis-à-vis the benchmark index. Over a three-year period, the fund experienced a volatility of 29 per cent as against 28 per cent of the Crisil BalancEx.
Portfolio Analysis
Within the equity portfolio, the fund maintains a diversified portfolio with exposure to both large- and mid-cap stocks, with a bias towards large caps. The quality of the fund’s equity portfolio has been relatively good, with exposure to liquid stocks and reasonable level of diversification.
Sector trends
Banks and financial institutions and information technology (IT) are the most preferred sectors in the fund’s portfolio, especially during the past year, where the exposure to these sectors was over a fourth of the total portfolio value. Banks and financial institutions, IT and pharmaceuticals were the biggest contributors to the total gains of the fund during the past year.
— Crisil Fund Services
