I have nothing new to say..but surely this group is starved of ‘income’ and therefore cash flow. The markets especially equity markets love cash flow and certain cash flows at that. If certainty and cash flows are missing, the p/e takes a hammering…so the market capitalisation of the group is down…from great heights reached.

Ok if you are a shareholder of ADAG you have lost money for sure. If you are a unit holder in the mutual fund run by the group – Reliance Mutual Fund do you have to worry? Well look at this:

First you could see talent fleeing: this does not directly affect the performance in the short term..but in the long term this could be an issue.

Reliance infrastructure fund, media fund, infra business and media business – suddenly you will find people questioning this!

If there is a run, NO FUND HOUSE can survive…this could be an issue

declaration: I have no shares or units of Reliance ADAG, or Reliance mutual fund, nor have I gone short on any of the shares…

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  1. Does this make a case for merger back into the Reliance fold at low valuations.. looking at the recent events where the ADAG brand has been removed and replaced with Reliance and the apparent patch up between the brothers

  2. RMF is an only a pass through vehicle for the investments. Money would stay or move out of the system depending on the performance of schemes.

    A run on a fund house is not similar to a bank run. There is an asset liability mismatch in case of banks. Moreover the performance of ADAG companies has nothing to do with that of Reliance mutual fund schemes.

    Assuming there is a run, a fund house may take a beating. But the investors’ money would be returned to them at prevailing market prices. Illiquid investments may take more time or the regulator can take a call of merging the fund house with another.

    An infrastructure finance company itself is coming out with an infra fund. RMF has an infra fund. It does not mean that they are investing the money in their infra business only. Please check the portfolio.

    Your posting sounds scary and it should not trigger panic when there is no need for one.

  3. I will take the author’s thought with pinch of salt.Nothing to worry or be scared about regarding rel MF.As long as performance is on the expected lines ppl will flock to them.Regarding the ADAG stocks excise caution in coming days.Markets don’t accept poorly managed or poor cash flow business.

    Disclosure: I own Rel MF Growth Fund units and ADAG stocks.

  4. Congrats Thiyaga and Muthu i hope your choice of fund house and stocks help your clients in the long run. I never had it in my investment portfolio even when the brothers were together. Happy for myself and happy for you.

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