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February 18, 2005 14:55 IST
Last Updated: February 18, 2005 15:25 IST
Reliance [Get Quote] Equity Opportunities Fund
| Type | Open ended
| Nature | Diversified (Equity)
| | Min. Investment | Rs 5,000 | Face value | Rs 10 | | Entry Load | 2.25% (waived off during IPO) | Exit Load | Nil (1.00% on exit before 6 months from IPO) | | Issue Opens | Feb 14, 2005 | Issue Closes | Mar 07, 2005 |
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| Reliance Equity Opportunities Fund (ROEF) is an open-end diversified equity fund that seeks to generate capital appreciation and provide long-term growth opportunities by investing in a portfolio of equities and the secondary objective is to generate consistent returns by investing in debt and money market securities.
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| Instruments | Normal Allocation | | Equity | upto 100% | | Debt/Money Market | upto 25% |
| REOF is a high risk-high return investment proposition within the diversified equity funds segment. The fund seeks to benefit from investments in equities across market capitalisations. Investing across market capitalisations has become something of a necessity as over the last 2-3 years we have seen the stock markets rallying in segments (large cap stocks/mid cap stocks) as opposed to broader rallies in the past that led to an overall surge in stock prices. Reliance Mutual Fund already has two funds with impressive track records - Reliance Vision Fund (predominantly invested in large caps) and Reliance Growth Fund (predominantly invested in mid caps). REOF will seek to invest across the stock market spectrum - large caps, mid caps and small caps. From that standpoint, the risk-return trade-off in REOF is between that of Reliance Growth and Reliance Vision. Investors who own Reliance Growth and Reliance Vision, between these two funds already own a Reliance Equity Opportunities Fund. For superior diversification they can consider owning a multi cap/opportunities fund from another fund house, as being exposed to three equity funds from the same fund house can be risky. For high-risk investors who are considering investing in REOF, a 3-5 year investment horizon is imperative.
| | REOF will invest in stocks drawn from across market segments - large caps, mid caps, small caps. Its offer document suggests that the fund will be invested largely in large caps and selecting a predominantly large cap benchmark index - BSE 100 is a pointer to that fact. If the fund does become a predominantly large cap fund there is a chance it will become a Reliance Vision clone, in which case Reliance Vision and Reliance Opportunities investors will have two very similar funds in their portfolio. REOF can invest upto 100% of its assets in equities. The stocks will be from across market segments (large caps, mid caps, small caps) and sectors. The fund proposes to pursue a combination of top-down and bottom-up investment approach. It can invest upto 25% of assets in debt and money market instruments. The fund has not imposed any cap on the sector/large cap/mid cap/small cap allocations. This suggests that the fund is going to use every means and opportunity to clock appreciation even if it entails taking very high risk.
| | Mr Sunil Singhania is Fund Manager - Equity at Reliance Mutual Fund. Apart from being a CA, he is also a Chartered Financial Analyst from AIMR, USA. Before his association with Reliance Mutual Fund, he gained considerable experience in the Indian equity markets. He was the President of Motisons Securities Private Limited, a broking firm that he was instrumental in setting up. Later he was a Director- Research and Institutional Sales at Advani Share Brokers Private Limited, a full service broking outfit specialising in Indian equity and catering to local and global fund houses. He was the promoter of The Association of NSE Members of India; a body of stock brokers and is also the chief initiator of the proposed India Society of the Association of Investment Management & Research. He also sits on the Standards & Practice Council of the AIMR, the first and only member so far based in India to do so. He manages Reliance Growth, Reliance Diversified Power and Reliance Media & Entertainment among others. Mr. Sailesh Raj Bhan, Equity Fund Manager, is an MBA and CFA (ICFAI), Before joining Reliance Mutual Fund he had worked in some stock brokerages for about 9 years.
| | Being an opportunities fund, we can be sure that REOF is going to invest any which way to ensure it clocks capital appreciation for investors. However, moving across market segments and sectors is not going to be a seamless process. The fund will witness above-average turbulence while it attempts to move in and out of market capitalisations/sectors. In other words, while the fund will try to clock a higher return, this will come at higher risk to the investor.
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