Reliance Mutual on Monday launched an equity fund, which will invest both in the cash and the derivatives segment to optimise returns.

Christened Reliance Equity Fund, the diversified equity fund will use derivatives strategies that aim to minimse risk and take advantage of both rising and falling market conditions.

The fund will use derivatives to hedge part of its portfolio to limit downside risk. More importantly, the fund will also exploit short selling opportunities.

The proportion of exposure to the derivatives will be linked to the P/E of the index and can go up or down as per the P/e movement.

The fund proposes to invest in the top 100 companies by market capitalisation apart from companies available in the derivatives segment.

About 75-100 per cent of the fund will be deployed in equities and the rest in debt and money market instruments. Reliance Mutual Fund had asset under management of Rs 16,700 crore (Rs 167 billion) as on January 31, 2006.

Meanwhile, Sahara Mutual has filed offer document for Sahara Fixed Maturity Fund, according to the Securities and Exchange Board of India Web site.

The close-ended scheme with monthly (31 days), quarterly (91), annual (375), and 18-month plans will invest in income securities of similar maturity. The scheme will offer dividend option.