Reliance Long Term Equity Fund: Invest with 3 yrs horizon

Reliance Long Term Equity Fund is an open ended fund with an objective to generate long term capital by investing in Small & Mid cap sector. The fund has highest exposure to Banking & Finance sector followed by Food & Beverage and Chemicals. Performance wise, this fund has delivered moderate returns and is suitable for investors with investment horizon of 3 years or more, reckons Arnav Pandya.

• The fund invests across a portfolio of mid and small cap companies. At the end of March 2011, Industrial products and Pharma were the top two sectors in the portfolio. Banks and pesticides were some other sectors with a significant share. In terms of individual holdings, Wabco India was the top holding with Rallis India, Greaves Cotton, Abbott India, Bank of Baroda, Corporation Bank and Unichem Labs being some other names in the top list. The portfolio turnover ratio was low at 0.18. The BSE 200 was the benchmark for the fund and it was an outperformer over the three year period and on par on the one year performance figure.
• Six months later, the cash holdings in the portfolio had risen to nearly 7 per cent. Industrial products remained the top sector with a 13 per cent share. Pharma, pesticides, auto ancillaries and banks were some of the other top sectors. Rallis with an 8 per cent share was the top individual holding. Wabco India, Greaves Cotton, Abbott India, Tube Investments, Bank of Baroda, JSL Stainless and Oriental hotels were some of the other leading holdings.  The portfolio turnover ratio dipped further to 0.11 and it was an outperformer over the one and three year time periods.
• The cash component in the portfolio kept inching higher as this neared the 9 per cent mark at the end of March 2012.  Industrial products and Pharma were on a similar level at 11 per cent in terms of the holdings in the portfolio.  Banks, pesticides and software were some of the other leading sectors. The share of the top holding in the portfolio was now at 5.3 per cent and this was Greaves Cotton. Tube Investments, Abbott India, Bank of Baroda, Wabco India, Divis Labs, Oriental hotels and Rallis made up the list of the top holdings. The fund was just a slight outperformer over the one and three year time periods.
• Six months later, the cash component in the portfolio had fallen below the 5 per cent mark.  The portfolio turnover ratio had climbed to nearly 0.4 times and the fund had a large cap stock ICICI Bank as the top individual holding. Pharma with a 12 per cent share had leapfrogged over other areas to become the top sector. Industrial products, banks, software and industrial capital goods were the other main areas in the portfolio. After ICICI Bank, Divis Labs, Greaves Cotton, Unichem Labs, Abbott India, Tube Investments, Sundaram Finance and Rallis India were the other leading holdings. The fund was an outperformer over the one and three year time periods ended June 2012. The fund then had a different benchmark in the form of the BSE Mid cap Index.
• At the end of March 2013, Pharma continued to be the top sector in the portfolio. Banks, consumer non durables, industrial capital goods and industrial products remained the other main areas. ICICI bank was the top individual share though its share had dropped below the 5 per cent mark.  Unichem Laboratories, Rain Commodities, Sundaram Finance, CCL Products, Triveni Turbine, Greaves Cotton and Tube Investment are some of the leading stocks in the portfolio. The portfolio turnover ratio had moderated to 0.25 times.  
• Investors looking to have an exposure to the small and mid cap space with a conservative outlook can consider using this fund as one of the choices in their portfolio. Only investors with a horizon of more than 3 years would find this a suitable option.