Wednesday, May 9, 2018

Reliance Top 200 Fund

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Sailesh Raj Bhan joined Reliance asset management company in 2003. At that time, he was an experienced research analyst without much portfolio management experience. He took on the role of a portfolio manager at the fund company in June 2004 and has since gained considerable experience running both diversified and sector funds. In our opinion, he has grown into an accomplished manager, with his funds producing a noteworthy track record.

Reliance Top 200 Fund investment approach underwent a change in August 2011 to allow Bhan more freedom. Previously it was a pure-play large-cap strategy known as Reliance Equity Advantage Fund, with the portfolio's sector weights firmly aligned to those of the index. Clearly, executing such a strategy constrained the manager. So, the approach was modified to give Bhan more leeway, with the investment universe expanded to the top 200 companies by market cap, thereby allowing investments in mid-caps. Though the weights of a few sectors may still somewhat align with those of the BSE 200 Index based on Bhan's view on those sectors, he is now willing to make bigger sector deviations than previously. While Bhan is a proficient stock-picker in the small/mid-cap segment, his track record suggests that he is at his best using an unconstrained approach. In effect, the current approach helps him play to his strengths. Expectedly, the same has worked well for the fund too.


Bhan's ability to pick fundamentally sound stocks and understand long-term trends has also benefited the fund. His willingness to take larger exposure to small/mid-caps if the opportunity arises and be more liberal with sector bets may result in the fund's performance diverging from a typical peer over the short term. For instance, in the upturn of 2012, the larger small/mid-cap exposure helped it feature among the best performers in the Category. Conversely, in 2016 the fund underperformed 80% of its category peers.


But we draw confidence from the presence of a skilled manager and a research-intensive investment approach. We believe these factors can hold the fund in good stead over the long haul.



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