Reliance Growth Mutual Fund - The name for consistency

Reliance Growth. It is one mutual fund that is known for its consistency and performance. We will see the internals of this fund, the top five categories and the top sectors on which it is betting on and the reason behind its success. Here is a snapshot of this fund.

Reliance growth is a mid cap oriented fund. So it carries a bit of risk but it has done exceptionally well so far.

Top holdings (as on 30th Apr): Divis Labs (4.49%), Reliance Industries (4.26%), Jindal Steel & Power (4.15%), Jaiprakash Associates (3.06%)

Top 5 sectors: Energy, Metals and Metal Products, Health Care, Services, Chemicals

Last 1 year return: 21.09% (category return is -10.09%)

5 year returns: 59.5%



This is one fund with great consistency and performance. One noticeable point is that the fund has grown to such huge amounts that it is now almost impossible to stay in 100% cash.
I also recommend this fund to be the core fund in ones portfolio for those who are willing to take that amount of risk to build wealth. It has all that to become one of the star performer.

Appraising your mutual fund portfolio.

Timely appraisal of our portfolio is as important as investing in good mutual funds. You might review your portfolio once in six months and consider changing your investments if your overall portfolio doesn;t do well.

This is as important as choosing a right fund for investment. See to it that your portfolio has a considerable percentage of debt component as well. This ensures safety and reduces the risk associated with equity investment. You may consider looking at the following before appraising your portfolio.

Age: Early you start investing , the better chances for you to create wealth.

Systematic investment: Invest through SIPs so that you make disciplined investments. Consider investing for atleast 5 to 7 years.

Diversification: How diversified is your portfolio? Is there any debt component as well? Check if you have given considerable portion of your total pie to the debt component. Increase debt component if you are above 40 years of age and reduce exposure to equity.

Do not over diversify as it can fetch you nothing.

Check the performance of your funds over the past 3 to 5 years. consider revising your portfolio if not satisfied with their performance. Invest in funds which performed consistently.

Mission 1 crore

Achieving one crore mark is the dream of many. Perhaps, everyone who is into investment and stock markets atleast, dreams of this magical figure. But is it that easy to achieve it is the point? After all, it is not impossible. Disciplined investing combined with good decision making while choosing your funds or stocks is the key to achieve this magic number.

People start investing in markets with great enthusiasm, may be, keeping in mind the stunning returns offered by Mutual funds. They get demotivated once the market falls and stop investing further. They get panic when markets fall and get over enthusiastic when the stock market reaches new highs. In fact the most important thing you should keep in mind is, your investment should go into the stock market when there is a fall and not when the market reaches its high.

It is possible to achieve one crore if you stick to disciplined and periodical investments. You should probably look at opting for Systematic investment plans, which in fact, averages out the risk associated with the investments. Also, the most important thing here to be noticed, is the investor invests in the market in a disciplined way, irrespective of whether the market is high or low. All this only, if it is combined with a good choice of mutual funds or stocks. Over long term, it definitely pays off. Keep in mind the following while investing to achieve your targeted amounts:

1. Do not start investing keeping in mind the huge returns.
2. Invest in a disciplined fashion and stick to timelines.
3. Make a good choice of funds to invest in, otherwise, it may not be fruitful.
4. Always choose to invest in consistent performers
5. Keep yourself away from New fund offers.
6. Do not get emotionally disturbed when market falls.
7. If you are investing in mutual funds, do not check your fund NAV's on a daily basis. Review your portfolio once in a six months.

Systematic Investment Plans - The best way to invest

Almost all the mutual funds offer investments through SIPs (Systematic Investment Plans). As told by most of the experts, SIPs are the best way to invest in mutual funds. The concept of rupee cost averaging is much publicized now a days, which is the core principle that works underneath the SIP route. Systematic investment plans work for the long term, atleast a minimum period of 5 to 7 years should be considered before starting a SIP.

The concept here is, when you invest systematically over time, your cost averages out to give you good returns. Your investment which periodical in nature purchases units of the mutual funds under different market conditions. So, when the market is low, you still invest, buying more units and the market is high, you invest getting low number of units. Over a period of time, which is actually over 3 years as suggested, you get to invest under different market conditions, buying more units when market is low and less units when market is high. So on an average, your cost of purchase becomes low to give you decent returns.

In general, SIP returns are higher if your investments are more during bear markets. This is because you buy more units of the fund, when the market is low. But the fact here is, you should stick to disciplined investing irrespective of the market conditions. This is not as easy as we think. Severe fluctuations in market often result in changing the minds of the investors. This is an emotional factor which varies from person to person.

But one who withstands this mental pressure and is disciplined in his investments periodically is rewarded well. Also, not to forget your investments should still be in well performing mutual funds.

You may consider investing in funds like HDFC Equity, HDFC Top 200, Reliance vision, Birla Sun Life Equity etc.

Mutual Funds to invest

There are several mutual funds to invest in the market today. But one has to be careful while investing. Always stick to those funds which are good performers over time. It is advised, you do a little research on the performance of the fund over a time frame of 3 years to 5 years. Also, see to it that the performance of the fund you choose is not bad during bear markets as well.

In this regard, the funds mentioned below are advised for investment. The funds below have performed well over years and always managed to be among the consistent performers.

HDFC Equity:
It is one fund which is known for its wisdom in spotting opportunities. It has always been on the charts for its returns. Morever, it is from the stable of the most successful fund house, HDFC which has a very good performance track record. More importantly, the fund manager himself is very renowned for his aggressive stock picking and making full advantage of the opportunities.
Risk: Low
Return: Above average

Reliance Growth:
A pure mid cap oriented fund which has proven its mettle over a period of time. Importantly, the fund has performed very well over years and has managed to be the star fund in the mid cap segment. Consistency is the key for this fund. The good thing is that, the fund even though its corpus has grown to enormous amounts, is managing well and maintaining its consistency.
Risk: Average
Return: High

Birla Sunlife Equity:
One of the best funds that came from the Birla Sun Life Mutual Fund. It is an old fund that has performed very well over years. This fund has all the qualities to be the core holding in your portfolio.
Risk: Average
Return: Above Average


Note: The future performance of above mentioned mutual funds is not assured.

Quant Funds - Fund management with Mathematics

In one of my earlier posts, i have discussed about "Active investments". Investments which are actively managed by the fund manager i.e., the fund manager himself is involved in taking the calls about what to buy and what to sell are termed as active investments.

Far away from the above concept, investors are going to witness the lauch of many Quant funds in India very soon. The only difference being that, in case of quant funds, the Fund manager devices a mathematical algorithm which is based on the statistics of the market and the behaviour of various stocks over a large period of time. But the point here is, Can the market be timed based on the statistics, which actually is a history? No one knows.

The entire stock selection is based on the quantitative analysis. A mathematical formula gives the fund manager a basis to identify the stocks for selection to make up his portfolio. Each fund house will develop its own algorithm which becomes its intellectual property. Even before these quant funds are open for subscription, they are rigorously tested, simulating different market conditions.

In fact, quant funds have been around since late 70's outside indian markets. Lotus India AGILE fund is India's first Quant Fund. Reliance has its own quant fund from its stable named Reliance Quant Plus Fund.

The hard thing to digest is that the quant funds have seldom performed well. Lotus India AGILE fund which was mentioned earlier had a poor performance compared to its Index benchmark.

New Fund Offers (NFO) - Stay away from them

Indian stock markets were at their peak in 2007. Investors witnessed a galore of New Fund ffers at that point of time. As many as 20 new fund offers were made during that period. But when the stock markets crashed in January 2008, all the funds that were introduced before Jan 2008 were badly hit by the crash. It was actually a lesson learnt for most of the investors.


In general, investors get lured by the NFOs or the new fund offers due to the exaggerated promotion by the companies. They tend to see the offers in a way that they can get the units at a mere 10Rs/unit. But they do not think whether this NAV at 10Rs per unit will sustain in future!

You get returns only when the fund performs well. So trust the funds that have proved their mettle over the past few years. You get returns when the funds performs well and increases its net asset value, irrespective of whether the unit is available for Rs. 10 or Rs. 100.What investors should do is to evaluate the funds over a period of time (time frame of 3 years to 5 years). Examine their returns, their stability of giving good returns and also the performance during the bear market which is actually very important.

For ex: Consider you have bought 100 units at Rs. 10 in a NFO. Simaltaneously, you have bought 10 units at Rs. 100 each from a reputed Mutual Fund which proved its performance over years. In a bull market the second fund performs very well and its NAV is increased to 110. So your investment is now worth 110*10units which is 1100Rs.

In the first case, where in we are not sure of the performance of the fund, the fund may perform good or bad. Say it has done well and its NAV is now 10.5, so your investment is now 10.5*100 which is 1050Rs. which is lower.

But the actual difference comes in when the market is in a bear phase. The reputed fund in second case performs well or atleast doesn't perform badly. But the NFO might lose value and your returns might shrink and can even give you a loss.

When you subscribe for a New Fund Offer, you are neither assured of its performance nor the returns. So always better avoid the New Fund Offers, unless the NFO has a very convincing idea which is unique and different from the available funds.

ULIP as an investment - Is it really worth?

Recent years saw a rise in the subscriptions for ULIPs or the so called Unit linked Insurance Plans. The reason behind being, ULIP is projected as a tool which offers both insurance and also returns on the investment. Although the statement is true by its nature, there are definitely limitations. I personally atleast don't see ULIPs as a form of investment. There are several reasons behind making this rather painful statement.

People have always been the victims either directly or indirectly when it comes to stock market investments. They are shown returns or features which are quite exaggerated by the so called "investment advisors". The same too happened in case of ULIPs as well. ULIPs are good tools when seen as an insurance and with very long term perspective (very long term here means atleast 10 to 15 years).

The executives who are trying more to market their product rather than understanding the actual need of the people exaggerate things. They only put before the investor, the returns that their product gives (might give) rather than the charges that are imposed. People generally tend to invest when they "foresee" the returns. But the truth here is that, the charges that are imposed in case of ULIP are far more than those that are incurred in a mutual fund investment. Nearly 20% or even more in some cases of your initial investment goes for administration charges. This should be properly disclosed to the investor before he puts his money. Once he / she invests in an ULIP, the money gets locked for 3 years officially and more unofficially for more than 10 years if he/she needs returns.

There is no denying that ULIPs are certainly good tool, but only if it is properly exploited. Do not ever invest in a ULIP, if it is for the sake of returns. Understand the actual need for a ULIP and then try to take a decision. Mutual funds are definitely a better option for investment than ULIP.

Only if you are in need of insurance and are willing to take quite an amount of risk (as the investment is linked to performance of the markets), go for a ULIP. Otherwise, my sincere advise is, go for mutual funds.

Invest for Long term

If we see the growth in number of people investing in stock markets, including Mutual Funds, it is stupendous in the last two or three years. That reflects the awareness that the stock markets and the media has brought in the minds of people. May be, it is also because of the fact that the the investments made in stock markets, especially in the last three to four years of time frame, has brought tremendous returns, even to the magnitude of 125% in a single calendar year.

So it should be quite predictable that people will be interested in stock markets. Not only businessmen and traders, we can even see employees from various firms investing in stock markets today. But the point to be noted here is, how many of them new the fundamentals of stock markets? Are they really investing after proper research? How many of them actually know what a P/E ratio is? How many are investing based on rumours?

These are some of the things to be noted. I think, it is because of these reasons, mutual funds are admired a lot. They eliminate the risk of study and research about stocks. You leave all that to the professional fund manager, who manages the fund. Even in this case, you need to select the right fund with unique idea and good performance track record. So at any point, some kind of research is mandatory. After all, it is your money.

The most common mistake with the investors (small investors), especially who are new to investing in stock markets, is that they tend to invest when markets are high and try to sell when markets fall. This is because, they panic when are markets crash and tend to invest when they see markets marching ahead. So what is the solution for overcoming this?

The only solution for eliminating this risk is investing for long term. Your investment, whether it is in stocks or in mutual funds, will be fruitful when it is for the long term. Day trading is dangerous and is not at all advised. Every investor should be aware of the fact that, if he is investing in purchasing a stock of that company, it means he believes in that company's business and it should be like he himself is running that business. So you should have the right selection of stocks of the companies with sound fundamentals and correct business processes in place. Choose such companies, invest your money in their business (purchase stocks) and stay invested for long term. The same holds good even for the mutual funds. Preferably, it is better to invest in mutual funds through Systematic Investment Plans and most importantly, do not expect immediate returns and stay invested for long term. Only patience pays.





Note: Long term in the above article refer to a period of 5 to 7 years.