Reliance Regular Savings Fund Balanced Option: Sales Note

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Stewart Thompson
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1 Reliance Regular Savings Fund Balanced Option: Sales Note Fund Positioning & Philosophy: Reliance Regular Savings Fund Balanced Option is a equity oriented Hybrid Fund which invests approximately 70 75% of its corpus in Equity and the balance in Fixed Income securities. RRSF - Balanced Option offers a good investment alternative for conservative investors seeking equity oriented returns with better downside protection. Investment Strategy Equity Large cap Portfolio o The fund invests approximately 75% of its equity allocation in large cap stocks o The fund follows a GARP (Growth at Reasonable Price) Strategy Mid Cap allocations based on relative valuations: o High margin of safety key investment parameter for Mid Cap allocations Alpha creation through: o Aggressive Sector deviations with significant over/under weight positions (as compared to Nifty) o High conviction investments, Concentrated portfolio of stocks o Concentrated Large Cap allocations o Contrarian view on Sector or Stock. Debt Moderate Duration o The debt portion of the portfolio aims to generate returns from accrual and capital gains through moderate duration o Medium Term duration profile managed in line with interest rate outlook (Duration Range 1 yr to 4.5 yrs) For Internal Circulation only Page 1

Current Focus Themes/Strategy: Domestic Economic & Consumption revival Themes that can benefit from domestic and consumption revival: Consumer Discretionary, Private Banks, Auto, Media, Telecom

2 Current Focus Themes/Strategy: Domestic Economic & Consumption revival Themes that can benefit from domestic and consumption revival: Consumer Discretionary, Private Banks, Auto, Media, Telecom Global Advantage Theme that may benefit by Currency movements, weak commodity prices: Information Technology, Pharmaceuticals and Oil & Gas Investment Rationale: Equity Growth potential with lower downside risk through fixed income exposure Focused Equity Portfolio with low dilution o Concentrated bets in large cap with only 16 stocks in NIFTY with a view to create alpha by exclusion as well A fine blend of aggression and conservation: o Aggression on concentrated sector bets and stock weights and conservation in entry price discipline profit booking Tax efficient high growth investment option offering regular cash flows through Quarterly tax free dividends and SWPs (Systematic Withdrawal Plans) Attribution Analysis Sector Over Weight / Under Weight: For Internal Circulation only Page 2

3 The following are the key contributors to Fund Outperformance: Sector Allocation: Alpha creation through high conviction / contra sector calls: Significant Over weight/ Underweight calls versus benchmark o Sector deviations Ex: Large Overweight in Auto Auto Ancillary, Private Banks, Capital Goods, Media and Telecommunications, Pharmaceuticals, Neutral in Oil & Gas o Contra Calls Ex: Maruti v/s M&M, TVS v/s Bajaj, Telecom sector Domestic Consumption: Allocations in Auto, Auto Ancillaries, Telecom and Media, which together account for ~ 50% of the portfolio. Outsourcing/ Exports: These sectors holdings in the portfolio have performed in line with the broader equity indices however, our portfolio has been constructed with an endeavor to gain meaningfully from a recovery-led sustainable growth, and we believe these sectors can outperform over the next few years. Stock Selection: Stock Selection has significantly contributed to the fund outperformance in the last one year. Top Contributors: Sector: IT, Healthcare, Financials*, Industrials and Consumer Discretionary Holdings: Intellect Design, Infosys, Maruti, Abbott, TV 18, Cummins *positive attribution due to underweight position Bottom Contributors: Sector: Telecom Services Holdings: Tata Motors, Axis Bank, Tata Steel, Idea Cellular, UFO Moviez Fund Performance Scheme v/s. Benchmark Reliance Regular Savings Fund Balanced Option has outperformed the benchmark (CRISIL Balanced Fund Index) across all time horizons. The fund has given 15% returns in the last three years as compared to 8% returns given by the benchmark. For Internal Circulation only Page 3

4 Scheme Name 1 Year 3 Years 5 Years 10 Years Since Inception Reliance RSF - Balanced Crisil Balanced Fund Index Outperformance Returns as on Jan 29, Inception Date is 09-Jun-05 The fund has consistently created wealth for the last 10 years since its inception in June RRSF Balanced has given returns of 13.7% since inception as compared to benchmark returns of 11.1% during the same period (as on Jan 29, 2016). Conclusion We believe investors in the Balanced Fund category are relatively conservative in their investment approach and seek lower volatility/risk than pure equity funds. Keeping in mind their investment approach, Reliance Regular Savings Fund Balanced Option as a strategy invests approximately 70 75% of its Equity allocation (50% of the total corpus) in large cap stocks as we believe these stocks can offer sustainable returns in the medium to long term as compared to mid & small cap stocks which can be more volatile. On the fixed income side also the fund maintains a conservative approach with a moderate duration (between 1 4 years) profile and investments in high grade instruments Thus Reliance Regular Saving Fund - Balanced is ideal for investors with moderate risk profile and seek equity linked returns with lower volatility. Systematic Withdrawal Plan an Easy way to plan for Regular Cash Flows Systematic Withdrawal Plan: A Systematic Withdrawal Plan (SWP) is a facility that allows an investor to take advantage of withdrawing a fixed amount of money from existing investments (mutual fund) at predetermined intervals to create a regular flow of income from their investments. Triple Benefits Through SWP + RRSF Balanced Option: Investors can now enjoy triple benefits SWP + RRSF Balanced Option: Wealth Creation through a conservative balanced fund: Investors can now invest lump sum in Reliance Regular Savings Fund Balanced Options and create wealth the balanced way (70% For Internal Circulation only Page 4

5 investments in equities for equity market upside and 30% debt for lower downside). RRSF Balanced has given returns of 14.4% CAGR since its inception in June 2005 Regular Cash Flows (Monthly SWPs): You can now choose to create to regular cash flows through Systematic Withdrawal Plan facility in RRSF Balanced Fund. You can choose to withdraw a fixed amount of money every month in order to take care of various monthly expenses like house rental/emis, utility bills or any other recurring expenditure. Tax Efficiency: RRSF Balanced Fund qualifies an an equity fund since more than 65% of the investments are made in equity and equity related securities. Hence, the fund attracts efficient equity taxation (no long term capital gains if the investment is held for more than 1 year). RELIANCE REGULAR SAVINGS FUND - BALANCED OPTION SYSTEMATIC WITHDRAWAL PLAN (SWP) A better alternative to Fixed Deposits If you had invested Rs. 10 lacs in the scheme at inception and started withdrawing Rs. 7,500 per month, i.e. 9% withdrawal annually (total withdrawal of 9.5 lacs), you will still have Rs lac worth of units today! An overall return of 14.5% per year! Amount Invested in June 2005 (@ inception) 10 Lacs Current NAV (as on 31 Dec 2015) Current Balance Units 44,624 Total Value of Current Balance Units (a) 18 Total amount withdrawn till date (b) (Rs. 7,500 p.m.) 10 Grand Total (a) + (b) Lacs CAGR Return % 14.5% The information contained herein is only for the reading/understanding of the registered Advisors/Distributor, and is not meant to serve as a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, affiliates or representatives ( entities & their affiliates ) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this material, shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this document. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. For Internal Circulation only Page 5

RELIANCE RETIREMENT FUND

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