Reliance Growth Fund is a mutual fund scheme that was launched by Reliance Mutual Fund and largely invests its funds into equities. What this means is that it is an equity oriented mutual fund scheme, which signifies that it is a high risk investment.
Returns of Reliance Growth Fund
The scheme was launched in 1995, which means its almost a two decades old scheme. Returns of the scheme since its launch has been 25.24 per cent. The scheme has therefore given far superior returns than bank deposits over the last two decades and one would have been better off, investing in the scheme than in a bank deposit.
Now, if one considers in the more short term, than the fund has given a return of a whopping 68 per cent in the last one year.
The three year returns from Reliance Growth Fund has been 20.69 per cent, while the five year returns has been a tepid 13 per cent. While the track record of the scheme has been good, there are some inherent risks.
Risks with Reliance Growth Fund
Much of the risks with the Fund would depend on how the stock markets behave. We believe that in the short term, if one is expecting very sharp returns from the stock markets, then that is too much to expect.
The reason is that markets have already run-up sharply and the scope of the Sensex giving 50 per cent returns like they have in the last one year is ruled out.
Therefore, one can expect more sober returns and the 68 per cent returns given by Reliance Growth fund in the last one year is impossible to match in the coming years.
A look at the portfolio of Reliance Growth Fund and the risks
Reliance Growth fund has invested in stocks like ICICI Bank, HCL Technologies, Lupin and UPL, which together form almost 20 per cent of the portfolio.
The portfolio is more balanced given the facts that it is into economy stocks as well as defensives.
This means should the markets fall, there would not be large scale damage to the portfolio given the presence of stocks like HCL Tech and Lupin.
Markets have run-up too sharply and hence if you buy the scheme now you would be buying the same at a very high net asset value.
What we suggest is that one should wait for sometime and let the stock markets fall. This would enable individuals to buy the Reliance Growth Fund Scheme at a much lower NAV.