An Overview of Reliance Mutual Fund


By

Akanksha Rai
Management Student
NSB, NIILM School of Business
New Delhi
 


UNDERSTANDING MUTUAL FUND

Mutual fund is a trust that pools money from a group of investors (sharing common financial goals) and invest the money thus collected into asset classes that match the stated investment objectives of the scheme. Since the stated investment objectives of a mutual fund scheme generally form the basis for an investor's decision to contribute money to the pool, a mutual fund can not deviate from its stated objectives at any point of time.

Every Mutual Fund is managed by a fund manager, who using his investment management skills and necessary research works ensures much better return than what an investor can manage on his own. The capital appreciation and other incomes earned from these investments are passed on to the investors (also known as unit holders)in proportion of number of units they own..


BREFING OF RELIANCE MUTUAL FUND

Reliance mutual fund, promoted by the Anil Dhirubhai Ambani (ADAG) group, is one of the fastest growing mutual funds in India having doubled its assets over the last one year. In March, 2006, the Reliance mutual fund emerged as the largest private sector fund house in the country, overtaking Prudential ICICI which has been holding that position For many years The sponsor of the fund is Reliance Capital Limited, the financial services arm of ADAG. Reliance Capital Asset Management Limited, a wholly owned subsidiary of Reliance Capital Limited, acts as the AMC to the fund. Directors of the company include Amitabh Jhunjhunwala, a senior executive of ADAG. Amitabh Chaturvedi is the managing director of the AMC

As of end August 2006, Reliance mutual fund has Rs 28,753 crore of assets under management. Reliance Equity Fund, launched by Reliance MF in early 2006, is the largest mutual find scheme in the country with a fund size of over Rs 5,500 crore.

A LEADER IS BORN

Reliance Mutual Fund is the largest player among asset management companies that is making an attempt to direct a portion of India's large domestic savings into the fund industry. It is the first asset management company to cross the Rs 1 lakh crore-mark in assets under management and has 72 lakh customers out of the total 3 crore customers in the entire MF industry in India. Besides, it has the distinction of being the most trusted asset management company for three years back to back by AC Neilson.

Reliance Mutual Fund has grown to be the leader in the mutual fund industry in a short span of less than five years, beating established players in the field. With Assets Under Management (AUM) of 1,18,251 crore, the fund house is a clear leader with a 20% lead over its nearest competition.

With more than 90% of the applicants having less than Rs 50,000 worth of investments and over 1 million SIP investors, Reliance Mutual Fund proves that it is truly a retail-focused fund house.

Reliance Capital Asset Management Ltd acts as the investment manager of Reliance Mutual Fund. Reliance Capital Asset Management is a subsidiary of Reliance Capital which holds 93.37% of the paid up capital of Reliance Capital Asset Management.

The mutual fund is the fastest growing mutual fund in the country and offers investors a well-rounded portfolio of products to meet varying requirements of customers. The mutual fund is present in 118 cities across India.

DIFFERENT TYPES OF MUTUAL FUND OFFERED BY RELIANCE MUTUAL FUND

Equity/Growth Schemes

The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

Debt/Income Schemes

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

Sector Specific Schemes

These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.

Exchange Traded Fund

Exchange Traded Funds (ETFs) are usually passively managed mutual fund schemes tracking a benchmark index and reflect the performance of that index. These schemes are listed on the stock exchange and therefore have the flexibility of trading like a share on the stock exchange. It can also be looked as a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange, thus experiencing price changes throughout the day as it is bought and sold.

Fixed Maturity Plans (FMPs)

Fixed Maturity Plans (FMPs) are basically debt oriented investment schemes with a pre-specified tenure offered by mutual funds. FMPs invest in a portfolio of debt instruments whose maturity coincides with the maturity of the concerned FMP. The primary objective of a FMP is to generate income while aiming to protect the capital by investing in a portfolio of debt and money market securities. Since FMPs are available with several maturity options, one can invest in the relevant plan depending upon his investment horizon and the requirement of cash flows.

Important Products Which Reliance Mutual Fund Offers

Reliance Growth Fund (An Open-ended Equity Growth Scheme): The primary investment objective of the scheme is to achieve long term growth of capital by investing in equity and equity related securities through a research based investment approach.

Reliance Vision Fund (An Open-ended Equity Growth Scheme): The primary investment objective of the scheme is to achieve long-term growth of capital by investment in equity and equity related securities through a research based investment approach

Reliance Equity Opportunities Fund (An Open-ended Diversified Equity Scheme): The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity securities & equity related securities and the secondary objective is to generate consistent returns by investing in debt and money market securities.

Reliance Quant Plus Fund (An Open-ended Equity Scheme): The investment objective of the Scheme is to generate capital appreciation through investment in equity and equity related instruments. The Scheme will seek to generate capital appreciation by investing in an active portfolio of stocks selected from S & P CNX Nifty on the basis of a mathematical model.

Reliance NRI Equity Fund (An Open-ended Diversified Equity Scheme): The primary investment objective of the scheme is to generate optimal returns by investing in equity and equity related instruments primarily drawn from the Companies in the BSE 200 Index.

Reliance Tax Saver (ELSS) Fund (An Open-ended Equity Linked Savings Scheme): The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments.

Reliance Regular Savings Fund (An open ended Scheme) Equity Option: The primary investment objective of this Option is to seek capital appreciation and/or to generate consistent returns by actively investing in equity / equity related securities.

Reliance Regular Savings Fund (An open ended Scheme) Balanced Option: The primary investment objective of this Option is to generate consistent return and appreciation of capital by investing in mix of securities comprising of Equity, Equity related Instruments & Fixed income instruments. 

Reliance Equity Fund (An open-ended Diversified Equity Scheme): The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities of top 100 companies by market capitalization & of companies which are available in the derivatives segment from time to time and the secondary objective is to generate consistent returns by investing in debt and money market securities.

Reliance Equity Advantage Fund (An Open ended Diversified Equity Scheme): The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio predominately of equity & equity related instruments with investments generally in S & P CNX Nifty stocks and the secondary objective is to generate consistent returns by investing in debt and money market securities.

Reliance Long Term Equity Fund (An open ended Diversified Equity Scheme): The primary investment objective of the scheme is to seek to generate long term capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities and Derivatives and the secondary objective is to generate consistent returns by investing in debt and money market securities.

Reliance Equity Linked Saving Fund Series I (A 10 year close-ended Equity Linked Savings Scheme): The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equities along with income tax benefit.

Reliance Natural Resources Fund (An Open Ended Equity Scheme): The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in companies principally engaged in the discovery, development, production, or distribution of natural resources and the secondary objective is to generate consistent returns by investing in debt and money market securities.

Reliance Infrastructure Fund (An open ended Equity Scheme): The primary investment objective of the scheme is to generate long term capital appreciation by investing predominantly in equity and equity related instruments of companies engaged in infrastructure and infrastructure related sectors and which are incorporated or have their area of primary activity, in India and the secondary objective is to generate consistent returns by investing in debt and money market securities.

References

http://business.mapsoindia.com
www.reliancemutual.com
 


Akanksha Rai
Management Student
NSB, NIILM School of Business
New Delhi
 

Source: E-mail August 26, 2010

 

           

 

Occasional Papers Main Page