Reliance Vision: Picks up winning stocks, but is risky

This is the underdog of our list. While Reliance Vision Fund can boast of a good long-term track record, it also has a higher risk profile when compared the other large-cap oriented funds in our prescription. We feel RVF will do well in the next three years - with reason.

The journey has been arduous for Reliance Mutual Fund. From about Rs 400 crore of assets under management in 2000 to Rs 31,572 crore (Rs 315.72 billion) as of the end of October 2006 and the third position among fund houses, it has been a long haul. After a change in fund management team and revamp of its equity-oriented schemes in 2000-01, there was no looking back.

Fund strategy

RVF is a large-cap oriented scheme that can invest up to 35 per cent of its corpus in mid-cap companies. And, true to its mandate, it has consistently invested around 30 per cent in mid-caps. Therefore, compared to pure large-cap schemes like Franklin India Bluechip, RVF carries a higher amount of risk.

For instance, RVF's downside risk measure for the past one year is 20.39, as compared to the category average of 20.36, while that of the other schemes in our list is in the 12-18 range.

RVF is opportunistic and doesn't hesitate to churn its portfolio frequently. It follows the growth style of fund management and holds around 10 per cent on an average in cash. Says fund manager Ashwani Kumar: "Apart from tiding over any redemption pressure, there are always opportunities in the market, particularly in the mid-cap segment."

Some of the scheme's biggest stories have come from its investments in Siemens, Bharat Forge, Television Eighteen, Jaiprakash Associates, Automotive Axles and Cummins.

Good performance

As on 31 October, RVF has returned 47.7 and 66 per cent CAGR in the past three and five years, respectively, as against the category average of 43.6 and 45.1 per cent CAGR. The top two schemes in the past five years belong to Reliance Mutual Fund and RVF is one of them.

It has managed its risks well and, therefore, has outperformed the Sensex and the category average across time periods. Although the middle name of Reliance Mutual is 'risky', it has a sound track record across equity schemes. But its strong focus on equities and its knack for picking winning stocks on the Street makes it one of the formidable weapons in your asset pie.

Fund manager

Ashwani Kumar comes with a rich experience in fund management having worked at Zurich India Mutual Fund as an analyst for 10 years. Besides RVF, he has also tasted success in Reliance Tax Saver Fund. Like some of the other leading equity fund houses in the industry, Reliance Mutual follows a team-based approach towards fund management and boasts of quality fund managers such as Sunil Singhania (who manages Reliance Growth Fund and sectoral schemes like Reliance Banking and Reliance Diversified Power Sector Fund) and Madhusudan Kela who heads its equity team. In fact, Reliance Mutual's performance has improved significantly since Kela joined in 2001.

Why buy

• Excellent long-term track record, opportunistic stock picking strategy
• Large-cap and a bottom-up approach to stock picking
• Sound track record in equity investments