HOME > MUTUAL FUND > CITRUS ANALYSIS
  CITRUS ANALYSIS
MUTUAL FUNDS NEWS
Fund Analysis: Reliance Top 200 Fund
Wed, Mar 16, 2016
Source : Jeni Shukla, Citrus Interactive

Reliance Top 200 Fund is a large cap equity diversified fund that seeks to generate long term capital appreciation by investing in equity and equity related instruments of companies whose market capitalization is within the range of highest and lowest market capitalization of BSE 200 Index. The secondary objective is to generate consistent returns by investing in debt and money market securities. The fund was launched in August 2007 and is benchmarked against the S&P BSE 200 index. Prior to 26 August, 2011 the fund was called Reliance Equity Advantage Fund. The fund has an AUM of Rs. 1,795 crore as on February 29, 2016 which has gone up by Rs. 620 crore as compared to last year February 28, 2015 (Rs. 1,175 crore). This is an impressive growth of over 50% within a year.


Performance:

Reliance Top 200 Fund has outperformed its benchmark in all the periods except 6 months. It has generated 2.89 percentage points higher CAGR return vis-à-vis its benchmark since inception. However, it has underperformed compared to the equity diversified category average in the last 6 months, 1 year, 3- and 5-year periods (refer table below).

Scheme Name

6 Months

1 Year

3 Years

5 Years

Since Inception

Reliance Top 200 Fund

-16.14

-19.98

13.2

10.27

8.34

S&P BSE 200 Index

-12.82

-19.8

8.48

6.15

5.45

Category Average

-13.58

-16.28

15.06

11.19

NA

Rank

128/160

131/159

84/145

68/137

NA

Figures are in % as on February 29, 2016; Returns above 1-year in Compounded Annual Growth Rate (CAGR)

The fund has beaten its benchmark in all the last five calendar years except 2013 (marginal underperformance). It has beaten its category average in the year 2012 and 2014. In all the other 3 years it has underperformed the equity diversified category average.

Scheme Name

2011

2012

2013

2014

2015

Reliance Top 200 Fund

-26.45

40.97

4.15

54.65

1.11

S&P BSE 200 Index

-26.95

30.98

4.38

35.47

-1.48

Category Average

-23.94

34.05

5.46

53.98

3.62

Rank

97/137

32/141

95/145

59/148

100/157

All figures in %

Risk: In terms of measures of risk such as standard deviation and beta (measured over last three years), the fund has taken higher risk compared to the category median.

 

Standard Deviation

Beta

Reliance Top 200 Fund

0.93

0.91

Category Median

0.88

0.86

Risk-adjusted Returns: In terms Treynor and Sharpe ratio (measured over last three years), the fund has provided higher risk-adjusted returns than the category median.

 

Treynor

Sharpe

Reliance Top 200 Fund

0.11

0.12

Category Median

0.1

0.11

 

Portfolio Characteristics:

Sector Concentration:  The fund’s concentration in the top 3, 5 and 10 sectors is higher than the category median.

 

Top 3

Top 5

Top 10

Reliance Top 200 Fund

38.76

50.41

72.05

Category Median

36.86

49.74

70.48

Company Concentration: The concentration of funds in top 3, 5 and 10 companies in its portfolio is higher than the category median highlighting higher risk of the fund.

 

Top 3

Top 5

Top 10

Reliance Top 200 Fund

20.04

30.97

53.21

Category Median

19.54

28.34

44.93


Number of equity holdings: The fund currently holds 33 stocks in its portfolio (January 31, 2016), which is much lower than the median stock count for the diversified-equity category, which currently stands at 45. Based on equity count the fund runs a concentrated portfolio compared to its peer set. Over the past five years the fund has always had a concentrated portfolio with the number of equity holdings over this period averaging 36.

Thus, based on criteria such as equity count, sector concentration and company concentration, one can conclude that the funds maintain a concentrated portfolio.

Cash allocation: Its cash allocation at the end of January 2016 was 0.77 per cent. The average cash allocation for last five years is 2.3 per cent. Its maximum allocation to cash over last two years was 8.39 per cent in September 2015 and lowest was -2.48 per cent in March 2014.

Portfolio Insights: The top 5 sectors in the portfolio had an allocation of 50.4% which is higher than the category median of 49.74%. The top 5 sectors include Banks, Refineries, Software and Electrical Equipments.

The fund’s exposure to cyclical stocks currently is 67% followed by Defensives with 12% and Services with 18%. The Top five holdings are Reliance Industries Ltd., HDFC Bank Ltd., Infosys Ltd., State Bank Of India and HCL Technologies Ltd.

In the last six months the fund has bought stocks of Zee Entertainment Enterprises Ltd., ITC Ltd., Bharat Electronics Ltd., Aditya Birla Fashion and Retail Ltd. and Idea Cellular Ltd.

Stocks of Maruti Suzuki India Ltd., Lupin Ltd.,Mahindra & Mahindra Ltd., Cadila Healthcare Ltd., Ultratech Cement Ltd., Wipro Ltd., Punjab National Bank, Thermax Ltd., Bharat Petroleum Corporation Ltd., Cipla Ltd., Shoppers Stop Ltd. and Oriental Bank Of Commerce have been dropped from the portfolio in the last six months.

The fund retains its large cap focus with the entire equity portion invested in stocks with market capitalisation higher than Rs 10,000 crs.


Process:

Atleast 65% of the funds will be invested in equities & equity related instruments and upto 35% in Debt and Money Market instruments. The Scheme will invest in equity or equity related instruments of companies whose market capitalization is within the range of highest & lowest market capitalization of S&P BSE 200 Index. The Scheme may also invest in large IPO’s where the market capitalization of the Company making the IPO based on the Issue price will be within the range of highest & lowest market capitalization of S&P BSE 200 Index.

The fund endeavours to invest in leaders or potential leaders with established businesses and sustainable free cash flows. The fund takes tactical exposure to sustainable alpha creators.

The fund’s expense ratio is 1.75% which is much lower than the category median of 2.42%. This is the lowest expense ratio in the large cap fund category. The fund has an exit load of 1 per cent on or before 12 months (1 Year) and Nil after 1 year.  Minimum investment required for the fund is Rs. 5,000.

Fund Managers:

The fund managers of Reliance Top 200 Fund are Sailesh Raj Bhan and Ashwani Kumar.

Mr. Sailesh Raj Bhan is Deputy Chief Investment Officer at Reliance AMC. He has about 19 years experience in equity research and fund management, with over 10 years at Reliance Capital Asset Management Ltd. He also manages Reliance Equity Opportunities Fund, Reliance Pharma Sector Fund and Reliance Media & Entertainment Fund. He has been managing the fund since 2007 (since the fund’s inception).

Mr. Ashwani Kumar is a Senior Fund Manager – Equity Investments at Reliance AMC. He has over 18 years of experience in the financial services industry and has been a Fund Manager since 2003.Other funds managed by him are Reliance Equity Advantage Fund, Reliance Vision Fund and Reliance Tax Saver (ELSS) Fund.

View:

Reliance Top 200 Fund has managed to beat its benchmark in most periods but the performance compared to the equity diversified category has not been very good. The last 1 year performance may have suffered due to its exposure to banks in general and public sector banks in particular. The mid cap segment of the market has done better than the large caps and this may have also affected the relative performance of the fund. A low expense ratio and a stable fund management team since inception are some positives. We feel 2016 will see a better performance by the large cap stocks and it may be meaningful to have an exposure to this segment via this fund which has a portfolio which truly reflects its large cap nature.

To read the previous Citrus Analysis of Reliance Top 200 Fund Click Here

 
|
|
|
|
|
|
|
|
 
blog comments powered by Disqus
  RELATED NEWS >>