Reliance Regular Savings Fund- A good show across timeframes, market cycles

Launched in June 2005, Reliance Regular Savings Fund-Balanced is classified under the balanced funds category of CRISIL Mutual Fund Ranking. It has been ranked in the top 30 percentile (CRISIL Fund Rank 1 or 2) over three consecutive quarters ended December 2017. The fund's primary objective is to generate consistent returns and appreciation of capital by investing in mix of securities comprising of equity, equity related instruments and fixed income instruments. The fund is managed by Sanjay Parekh and Amit Tripathi. Its quarterly average assets under management stood at Rs 102.33 billion for the December 2017 quarter.

Consistent outperformance

The fund has consistently outperformed its benchmark (CRISIL Hybrid 35+65 - Aggressive Index) and its peers (funds ranked under the balanced funds category in December 2017 CRISIL Mutual Fund Ranking) across all trailing periods under analysis.  

The fund has weathered many bull and bear phases, and has outperformed its benchmark and the category in most phases.

An investment of Rs 1,000 in the fund on June 8, 2005 would have grown to Rs5,467 (compounded annualised returns of 14.27 per cent) as on March 1, 2018 compared with a similar investment in the benchmark which would have grown to Rs 4,613 (12.75 per cent).

Systematic investment plans (SIPs) offer investors a disciplined mode of regular investments for achieving their financial goals. An SIP of Rs 1,000 per month in the fund in the past 10 years totaling Rs 0.12 million, would have yielded Rs 0.27 million by March 1, 2018 at 15.99 per cent annualised returns. In comparison, the same investment in the benchmark would have returned Rs 0.22 million at 12.09 per cent.

Portfolio analysis

The fund had average allocation of 69.5 per cent to equities, 26.4 per cent to fixed income and the remaining to cash and equivalents over three years. Large cap stocks constituted 75 per cent, on average, of the equity exposure.

During this period, the top five sectors constituted about 40.81 per cent of the fund's exposure, led by banks (18.21 per cent), auto (7.24 per cent), software (5.58 per cent), petroleum products (5.32 per cent) and pharmaceuticals (4.45 per cent). Banks, automobiles and petroleum products, along with cement and auto ancillaries, also featured in the list of top contributors to the fund's performance. 

Within banks, HDFC Bank and IndusInd Bank delivered handsome returns, while Motherson Sumi Systems and Sundaram-Clayton were the key contributors from the auto ancillaries sector. Other stellar performers were Maruti Suzuki, Reliance Industries, Grasim Industries and Indian Oil.

The fund has held 47 stocks in its portfolio, on average, of the 109 stocks that it took exposure to during the past three years. Thirteen stocks were held consistently (36 per cent of the portfolio on average), of which eight outperformed the Nifty 50. Over three years, the equity portfolio has witnessed an increase in the number of stocks (from about 40 in 2015 to about 60 recently) held in its portfolio.

The fixed income portion of the portfolio (26.4 per cent exposure) was predominantly invested in sovereign and highly rated corporate securities (AAA/A1+), comprising about 18.9 per cent, and the rest in sub-AAA/A1+ rated securities over the past three years. However, recently the fund has witnessed a shift in the investment pattern from highly rated securities to sub-AAA/A1+ rated securities.

CRISIL Research