Reliance Growth Fund. An Open Ended Equity Growth Scheme DECEMBER 2011

Transcription

1 Reliance Growth Fund An Open Ended Equity Growth Scheme DECEMBER 2011

2 For the Long Run The individual investor should act consistently as an investor and not as a speculator. This means.. that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money's worth for his purchase. Benjamin Graham Confidential Slide 2

3 Philosophy of the fund Generate Alpha No Bias to sectors or Stocks Focus on Value Lower weightage to Benchmark investing Cash calls during market extremes If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume Benjamin Graham Confidential Slide 3

4 1. Generating Alpha - Differentiated Portfolio Company RGF Holding as a % of Equity Overall MF Holding as a % of Equity RGF as a % of MF holding Shiv Vani Oil & Gas Exploration poato Services Ltd Indiabulls Financial Services Ltd Jindal Saw Ltd Bombay Dyeing & Manufacturing Co Ltd Strides Arcolab Ltd Escorts Ltd Financial Technologies India Ltd Sintex Industries Ltd Radico Khaitan Ltd Everest Kanto Cylinder Ltd Greaves Cotton Ltd Ranbaxy Laboratories Ltd Orient Paper & Industries Ltd Gujarat State Fertilisers & Chemicals Ltd EID Parry India Ltd Gujarat Fluorochemicals Ltd BEML Ltd Gujarat Mineral Development Corp Ltd HCL Technologies Ltd United Phosphorus Ltd RGF : Reliance Growth Fund "Opportunities Are Like Sunrises, If You Wait Too Long You Can Miss Them - William Arthur Source: Fund Fact Sheet, Bloomberg, Capital Line, RMF Estimates As on 31 st DECEMBER 2011 Confidential Slide 4

5 1. Generating Alpha Sizable Profits % of AUM PAT (Rs. Mln) FY11 FY12E EID Parry India Ltd ,123 4,655 Jindal Saw Ltd ,334 4,787 Divis i Laboratories Ltd ,293 5,014 Gujarat Mineral Development Ltd ,748 4,779 Financial Technologies India Ltd ,926 GREAVES COTTON LTD ,571 1,923 Strides Arcolabs Ltd ,224 1,945 Sintex Industries Ltd ,600 5,524 UNITED PHOSPHORUS LTD , ,370 Indiabulls Financial Services Ltd ,087 9,378 Mid- Cap holdings have sizeable profits The above mentioned stocks forms a partoftheportfolio of the Scheme as on December 31, 2011and is not an offer or advice to buy or sell the said stocks. The scheme may or may not have future position in the said stocks and is subject to changes. It should not be construed to be an indicative of any of the schemes of Reliance Mutual Fund.. FY Stands for as on 31 st March of that year Source: Fund Fact Sheet, RMF Estimates, FY12 Estimates are Bloomberg consensus estimates Confidential Slide 5

6 1. Generating Alpha Value stocks with growth potential FY06 FY07 FY08 FY09 FY10 FY11 Dec-11 Large Value Contra Growth High Growth Larger Companies are 25% to 45% of portfolio To maintain Portfolio Liquidity and capture a part of market returns Growth & High Growth Stocks Companies where profitability is expected to grow higher than market average Value Stocks - Fundamentally underpriced stocks with reasonable growth expectations Contrarian Investments Investments that are currently out of favour FY Stands for as on 31 st DECEMBER of that year Confidential Source: Fund Fact Sheet, RMF Estimates Slide 6

7 1. Generating Alpha Investing in Growth Companies PE (x) PAT (Rs. Crores) FY11 FY12 FY13 H1FY12 H1FY11 Growth Growth BOB IN Equity ,199 1,878 17% LPC IN Equity % RIL IN Equity ,364 9,774 16% HCLT IN Equity , % GSFC IN Equity % ICICIBC IN Equity , ,262 25% JSAW IN Equity % DIVI IN Equity % GMDC IN Equity % STRINEquity , ,881 43% BSE , ,249-8% BSE100 (ex-omc's) 131, ,920 8% Profits of 9 of our Top 10 holdings have grown faster than BSE-100 profits The above mentioned stocks forms a part of the portfolio of the Scheme as on December 31, 2011and is not an offer or advice to buy or sell the said stocks. The scheme may or may not have future position in the said stocks and is subject to changes. It should not be construed to be an indicative of any of the schemes of Reliance Mutual Fund.. Source: Fund Fact Sheet, RMF Research, BSE India,, Bloomberg Estimates Confidential Slide 7

8 1. Generating Alpha Strong In-House Research One of the largest buy side investment teams One of the most stable teams Cumulative experience of more than 250 years Of which h Collectively l with Reliance Mutual Fund of 125 years Proprietary Research Focus on in-depth research In-house specialists in all key areas Fund Manager devotes time to research Group Approach Co-ordination within the team Leverage on each others competency Confidential Slide 8

9 2. No investment Bias Investments in a mix of secular and cyclical companies Investment in secular companies Long term sustainable growth companies Give stability to portfolio during periods of economic stress Invest in cyclical as well as volatile sectors For a growing economy like India such companies may generate strong growth With due effort and reasonable timing such ideas generate disproportionate t returns Examples are sectors like commodities, construction, real estate etc Confidential Slide 9

10 3. Focus on Value Portfolio PE Lower than market PE What does this indicate? Cheaper valuations Re-rating due to earnings growth FY11 FY12E FY13E Portfolio Weighted Average P/E BSE 100 P/E FY Stands for as on 31 st DECEMBER of that year Source: Fund Fact Sheet, RMF Estimates, Bloomberg Confidential Slide 10

11 3. Focus on Value However, value is not the sole criterion Value with Growth Companies that have the potential to substantially increase their profitability. Companies with consistent track record Companies that are only value Avoid potential value-traps by focusing on companies that may be potential re-rating candidates. Confidential Slide 11

12 4. A part of portfolio invested in Benchmark Name Of Co Fund Weight BSE 100 Weight Lower Lupin Ltd HCL Technologies Ltd Reliance Industries Ltd Bank of Baroda Divi's Laboratories Ltd ICICI Bank Ltd Infosys Ltd Ranbaxy Laboratories Ltd Tata Motors Ltd United Phosphorus Ltd Jindal Steel & Power Ltd State Bank of India Federal Bank Ltd Indiabulls Financial Services Ltd Bharti Airtel Ltd Indian Oil Corp Ltd Mahindra & Mahindra Ltd Crompton Greaves Ltd Jaiprakash Associates Ltd NTPC Ltd Tata Chemicals Ltd Note -Numbers based only on Positions where weight is more than 1% As on 31 st December Approximately 50% of the Fund was invested in BSE-100 Generally, investment in benchmark is between 35% to 55% of the corpus Source: Fund Fact Sheet as on 31 st DECEMBER2011, Index weights source: Bloomberg Confidential Slide 12

13 5. Cash calls during market extremes Year Cash as % of AUM FY FY FY FY FY FY Dec During market extremes a part of the portfolio was in cash As conditions became favorable cash was invested Note - Cash as on 31 st DECEMBER of the respective year. Source: Fund Fact Confidential Slide Sheet 13

14 Why invest in mid-caps? S&P 400 MIDCAP INDEX S&P 500 INDEX 1,100 1, Past Performance may or may not be sustain in future. Over long period Mid-caps outperform Large-cap Volatility is higher as compared to large caps. It can also be an Opportunity for long term investors Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it Warren Buffet The above graph depicts the performance of various indices over a period of time and shall not be considered to be an indicative of any of the schemes of Reliance Mutual fund in any manner. Source: Bloomberg; from 31 st December 1990 to 30 th December, 2011 Confidential Slide 14

15 Fund features One of India's largest funds Mid-cap focussed Diversified across sectors Investments in companies which may provide favorable risk reward Some Large cap investments for portfolio liquidity Focus on internal idea generation. Source: AUM data from AMFI Confidential Slide 15

16 Portfolio Construction Truly Diversified Fund FY06 FY07 FY08 FY09 FY10 FY11 Dec-11 Large Mid Misc Cash Investments Spread out FY06 FY07 FY08 FY09 FY10 FY11 Dec-11 % of AUM in Top No Of Stocks>1% FY Stands for as on 31 st DECEMBER of that year Source: Fund Fact Sheet, RMF Estimates Confidential Slide 16

17 Suitability of the fund Investors targeting long term absolute returns in a mutual fund format Diversified portfolio through a single scheme Invest systematically in a bouquet of value and growth stocks For investors looking to invest in a mid cap Confidential Slide 17

18 Risk Manage risk at a portfolio level Aggressive sector bets are offset with high allocation to sectors like Healthcare Portfolio has investments in a basket of high conviction ideas Risk Measures Generally, no stock is over 5% of the portfolio Generally, no sector is more than 18% of the portfolio Confidential Slide 18

19 Portfolio Beta Year Beta Dec Low beta denotes a less volatile portfolio Attempt is to outperform benchmark with lower volatility Source: Fund Fact Sheet Confidential Slide 19

20 Dividend History Record Date Rate (Re/ Unit) Cum Dividend NAV *Ex-Dividend NAV Date Rate (Re/ Unit) Cum Dividend NAV *Ex-Dividend NAV 21-Mar Mar Feb Oct Jul Mar Oct Aug Dec Mar Mar Mar Oct Oct Dec Mar Mar Mar Dec "Past performance may or may not be sustained in the future; Dividend distribution is subject to availability & adequacy of distributable surplus. The Mutual Fund is not assuring that it will make periodical dividend distributions, though it has every intention of doing so. After the payment of dividend, the per unit NAV falls to the extent of the dividend payout and distribution taxes, if any. Performance of dividend plan/ option would be net of applicable statutory levy, if any. *NAV on the 1st transaction day after Record Date, which includes the mark to market impact also." Source: Fund Fact Sheet, Face Value Per Unit Rs 10 Confidential Slide 20

21 Scheme Features Investment Objective The primary investment objective of the Scheme is to achieve long term growth of capital by investing in equity and equity related securities through a research based investment approach. Inception Date 8 th October 1995 Nature of Scheme An Open Ended Equity Growth Scheme Benchmark BSE 100 Proposed Asset Allocation Equity & Equity Related Securities 65% 100% Debt & Money Market Instruments 0 35% Fund Corpus Quarterly AAUM: Rs Crores ( December, 31 st 2011) Confidential Fund Manager : Mr. Sunil Singhania Slide 21

22 Scheme Features Choice ofplans/options Load Structure Retail & Institutional: Growth Plan Growth option & Bonus Option Dividend Plan Dividend Payout & Reinvestment Option Minimum Application Amount Retail Plan: Rs 5000 and in multiples of Re. 1 thereafter Institutional Plan Rs 5 cr and in multiples of Re. 1 thereafter Entry Load: * Retail Plan Institutional Plan NA NA Exit Load : ( WEF, 24 th Aug 2009) 1% if redeemed or switched out on or before completion of 1 year from the date of allotment of units Nil if redeemed or switched out after completion of 1 year from the date of allotment of units *In terms of SEBI circular no. SEBI/IMD/CIR / No.4/ /09 dated June 30, 2009, no entry load will be charged by the Scheme to the investor effective August 1, Upfront commission shall be paid directly by the investor to the AMFI registered Distributors based on the investors' assessment of various factors including the service rendered by the distributor Confidential Slide 22

23 Portfolio & Performance Insight Top 10 Holdings & Top 5 Sectors (December 31 th, 2011) Portfolio of Reliance Growth Fund as on 31/12/2011 Sector Allocation Holdings Weightage % Equities- Lupin Ltd 4.07 HCL Technologies Ltd 3.95 Jindal Saw Ltd 3.88 Reliance Industries Ltd 3.72 Bank of Baroda 3.61 Divis Laboratories Ltd 3.57 ICICI Bank Ltd 3.46 Gujarat State Fertilizers & Chemicals Ltd 3.01 Strides Arcolab Ltd 2.96 Gujarat Mineral Development Corp Ltd 2.75 Pharmaceuticals 13.61% Banks 11.58% Software 9.42% Ferrous Metals 7.21% Petroleum Products 5.87% Past Performance may or may not be sustained in the future. The above mentioned stocks forms a part of the portfolio of the Scheme as on December 31, 2011 and is not anofferoradvice to buy or sell the said stocks. The scheme may or may not have future position in the said stocks and is subject to changes. It should not be construed to be an indicative of any of the schemes of Reliance Mutual Fund.. Confidential Slide 23

24 Disclaimers: The views expressed herein constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. This information is meant for general reading purposes only and is not meant to serve as a professional guide for the readers. Certain factual and statistical (both historical and projected) industry and market data and other information was obtained by RCAM from independent, third-party sources that it deems to be reliable, some of which have been cited above. However, RCAM has not independently verified any of such data or other information, or the reasonableness of the assumptions upon which such data and other information was based, and there can be no assurance as to the accuracy of such data and other information. Further, many of the statements and assertions contained in these materials reflect the belief of RCAM, which belief may be based in whole or in part on such data and other information. The Sponsor, the Investment Manager, the Trustee or any of their respective directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given are fair and reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument. Recipients of this information should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice, verify the contents and arrive at an informed investment decision before making any investments. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affiliates or representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in this material. The Sponsor, the Investment Manager, the Trustee, any of their respective directors, employees including the fund managers, affiliates, representatives including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities thereof, of company(ies) / specific economic sectors mentioned herein. Confidential Slide

25 Statutory Details & Risk Factors: Statutory Details: Reliance Mutual Fund has been constituted as a trust in accordance with the provisions of the Indian Trusts Act, Sponsor: Reliance Capital Limited. Trustee: Reliance Capital Trustee Company Limited. Investment Manager: Reliance Capital Asset Management Limited (Registered Office of Trustee & Investment Manager: "'H' Block,1st Floor, Dhirubhai Ambani Knowledge City, Koparkhairne, Navi Mumbai , Maharashtra. ). The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond their initial contribution of Rs.1 lakh towards the setting up of the Mutual Fund and such other accretions and additions to the corpus. Reliance Growth Fund (An Open-ended ended Equity Growth Scheme): The primary investment objective of the scheme is to achieve long term growth of capital by investing in equity and equityrelatedsecuritiesthrougharesearchbased investment approach. Asset Allocation: Equity and Equity related Instruments: 100 to 65%, Debt Instruments & Money Market Instruments: 35 to 0%. Loads: Entry Load Nil, Exit Load - 1%, if redeemed or switched out on or before completion of 1 year from the date of allotment of units, Nil thereafter. Risk Factors: Mutual Funds and securities investments t aresubject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on the factors and forces affecting the capital markets. Reliance Growth Fund is only the name of the Scheme and does not in any manner indicate either the quality of the Scheme; its future prospects or returns. Past performance of the Sponsor/AMC/Mutual Fund is not indicative of the future performance of the Scheme. The NAV of the Scheme may be affected, interalia, by changes in the market conditions, interest rates, trading volumes, settlement periods and transfer procedures. For details of scheme features and for Scheme specific risk factors, please refer to the Scheme Information Document which is available at all the DISC / Distributors / Please read the Scheme Information Document and Statement of Additional Information carefully before investing. Confidential Slide 25

26 Thank you Keep on Growing