Yesterday a friend showed me the working of Reliance Mutual fund – he does not want to share the work publicly though. He took a very (perhaps not practical) view that an investor does a Rs. 1000 SIP in each and every equity fund of reliance mutual fund right from the date of launch of the fund.

The results were not very nice – the number of non performing fund schemes is hurting. Even though the client would have done well in Vision, Growth and a couple of others, many other schemes have hurt. Also I do not have the numbers, and commenting would be wrong because he did not have such a study of other fund houses, I will leave you with a Wall Street Journal article on Reliance Mutual fund.

Did you notice the ADAG has quietly dropped ADAG…and calls itself Reliance..Will it improve their cash flows? Er…not sure 🙂

http://online.wsj.com/article/SB10001424052748703555804576103180418654022.html?mod=WSJ_hp_us_mostpop_read

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  1. Subra
    One fund where reliance mf is doing well is reliance pharma fund. (i know that this is sector fund and returns are due to the good performance in this sector over the last few years. but still). i started a SIP in this last month. (other funds in my sip include, hdfc equity,hdfc prudence,hdfc top 200, idfc premier equity).. whats ur view on this? i wasnt keen on a fund run by reliance. but the performance has been really good. has outperformed all peers.

  2. Gautham no reliance funds, only Hdfc, Templeton and Naren Sankaran managed funds! Having said that, you invest in a sector fund when it is DOING VERY BADLY and nobody is investing in it. So a little late for a pharama fund. Also in case of timing, prefer lumpsum instead of a SIP. Personally do not like it…

  3. hi Subra,

    I have one doubt with respect to this statement in the article —

    “In addition, the company’s flagship 34.5 billion ($758 million) Reliance Vision fund lags its benchmark BSE 100 index by more than three percentage points. The index returned 10.4% over the year through Friday, while the fund, which aims to beat the index through stock-picking, returned 7.23%”

    Normally a person holding the BSE-100 (in the same ratio as index itself) companies would have also received some dividend’s from his holdings. Does this kind of calculation quoted in articles takes into account the ‘growth + dividend returned’ by the index Vs the growth %tage of the fund ??

    Regards

  4. you have actually asked a very sophisticated question! The index does not pay brokerage while the fund pays brokerage. The fund receives dividend but the index does not..all this gets adjusted in the tracking error..that is all.

  5. What funds does Naren Sankaran manage?

    Also till what percentage of investment can we be comfortable with a fund house ? I have 30% of my investments with DSPBR (Equity, Opportunities, Small&Midcap funds). Should I worry?

  6. Dear Subra,

    I have been following your blog for last few months. Your message was to go in for SIP all along.

    But in your comment above, you state that you do not like SIP but would prefer to go in for lumpsum investments.

    why this contradiction?

  7. i still hold for the not very sophisticated investor the SECTORAL fund is avoidable. In sectoral funds TIMING is important, therefore only a lumpsum will work, not a SIP…hence the contradiction..

  8. 1 year performance is not good indicator. It should be three years.

    Take example of Principal Tax Savings fund. When many funds have recorded positive growth PRincipal Tax Savings fund managed to get -10%

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