Reliance Top 200 and Reliance Equity Opportunities have both been assigned a Silver rating by our analyst. Besides being products from one AMC, both are managed by fund manager Sailesh Raj Bhan, an accomplished manager who has been with Reliance AMC since 2003.
Bhan’s investment style is fundamentals-driven and research-oriented. He plies a growth-at-a-reasonable-price approach to selecting stocks. He prefers companies with healthy or rising ROEs over a three- to five-year period. Though conscious of valuations, he does not mind paying more for a company if he believes it has sustainable advantages over its peers and good growth prospects.
Reliance Top 200
- Category: Large Cap
- Analyst Rating: Silver
- Star Rating: 4 stars
Reliance Top 200's investment approach underwent a change in August 2011. Earlier the fund’s sector weightings firmly aligned with those of the index. It was modified to include the top 200 companies by market cap, allowing investments in small/mid-caps.
This resounded well with fund manager Sailesh Raj Bhan who went on to deliver an outstanding performance in 2012, placing the fund in the fourth spot in its category in terms of performance. The performance is noteworthy given the underweighting in the consumer defensives sector, which fared impressively.
His investments in benchmark heavyweights (ICICI Bank, HDFC Bank, and Tata Motors), and his small/mid-cap bets (Prestige Estate Projects and Shoppers Stop), paid off handsomely.
Unfortunately, the very next year it worked against him. A combination of factors-- higher exposure to small/mid-caps (versus the norm), an underweighting in the resilient consumer defensives sector, and investment in select stocks such as Ranbaxy Labs and JSP—led to slight category underperformance.
Read the research note on Reliance Top 200 here.
Reliance Equity Opportunities
- Category: Flexi Cap
- Analyst Rating: Silver
- Star Rating: 4 stars
In the case of Reliance Equity Opportunities, taking big sector/thematic bets forms an integral part of the investment strategy. A noteworthy aspect of Bhan’s investment style is his penchant for emerging/niche themes (roughly 20%), which he believes have substantial upside potential over the long term.
He invests up to 10% of assets in value stocks to reduce price risk in the portfolio, given its large growth bias. Bhan invests in stocks from across market segments, with 40%-60% of assets in large caps. He is patient with his investments in mid/small-cap stocks, emerging/niche themes, and value picks, given his believe that such companies have long gestation periods and may not bear fruit immediately. On the other hand, large caps are in a position to generate market-linked returns, ensuring stability and adequate liquidity in the portfolio.
Just like Top 200, the fund delivered impressively in 2012. His stock picks such as Hathway Cable & Datacom and Persistent Systems and his bets in the retail sector such as Shoppers Stop and Trent bore fruit. Unlike Top 200, this fund did not falter the very next year. In fact, the fund consistently beat its category average over seven years but ran into some rough weather last year and is underperforming the category average in YTD returns.
Read the research note on Reliance Equity Opportunities here.
Also Read:
What to note about Reliance Growth
What to note about Reliance Mid & Small Cap
Reliance Growth and Franklin India Prima: An unfair comparison
