Planning to invest in MFs? Reliance Large Cap Fund is an outperformer

Launched in August 2007 as Reliance Top 200 Fund, the fund was renamed Reliance Large Cap Fund in April 2018 and repositioned as a large-cap fund post the reclassification of mutual funds by the Securities and Exchange Board of India. It featured in the top 30 percentile in the large-cap category of CRISIL Mutual Fund Ranking (CMFR) during the past three quarters ended June 2019. Sailesh Raj Bhan has 23 years of industry experience and has been managing the fund since its inception in August 2007. The assets under management (AUM) of the scheme increased over five times during the past three years from Rs 2,417 crore in August 2016 to Rs 12,261 crore in July 2019.

The primary investment objective of the scheme is to generate long-term capital appreciation by investing predominantly into equity and equity-related instruments of large-cap companies. The secondary objective is to generate consistent returns by investing in debt, money market securities, REITs, and InvITs.

Trailing returns

The fund has delivered superior returns than its benchmark and peers in the long term. It outperformed the benchmark (S&P BSE 100 TRI) during the past five-, seven-, and 10-year trailing periods. It also outperformed its peers (funds ranked under the large-cap category in CMFR–June 2019) during the past three-, five, seven-, and 10-year trailing periods. An investment of Rs 10,000 in the fund on August 8, 2007 (inception of the fund), would have grown to Rs 31,663 on August 30, 2019, at an annualised rate of 10.02 per cent. In comparison, the same investment in the category and the benchmark during the same period would have grown to Rs 29,390 (9.34 per cent per annum) and Rs 28,712 (9.13 per cent per annum), respectively.

Systematic investment plan (SIP) is a disciplined mode of investing where an investor invests a certain amount at regular intervals in a mutual fund scheme. A monthly SIP of Rs 10,000 for the last 10 years in the fund, totalling Rs 12 lakh would have grown to Rs 21.64 lakh (11.36 per cent annualised returns) on August 30, 2019, as compared to Rs 20.58 lakh (10.42 per cent annualised returns) in the benchmark.

Portfolio analysis

In the past three years, the fund has predominantly invested in large-cap stocks with the allocation averaging 79.17 per cent in this period. The allocation to mid-cap and small-cap stocks averaged 15.47 per cent and 2.86 per cent, respectively.

The portfolio was diversified across 26 sectors in the past three years. Banks had the highest average allocation of 24.37 per cent during this period, followed by pharma (8.79 per cent), finance (7.22 per cent), auto (7.06 per cent) and oil&gas (7.01 per cent).

The fund invested in 98 stocks in the last three years and held 15 stocks consistently. State Bank of India, HDFC Bank and ICICI Bank have been the highest contributors to the fund’s performance and were also consistently held. Other major contributors included Bajaj Finance and Reliance Industries.

CRISIL Research