Reliance Income unlikely to witness heavy inflow in a saturated market
Vipul Mehrotra
MUMBAI, Dec 28: Reliance Capital Mutual fund has launched its open-end income scheme, Reliance Income Fund. Reliance Income Fund is the first pure debt scheme and the second open-end scheme to be launched by Reliance. The earlier two schemes were simultaneously launched in September, 1995.Like the earlier two launches, the launch of Reliance Income Fund has been without much fanfare. It might be recalled that Reliance Growth and Reliance Vision was also a low key affair. The two schemes were open for initial subscription for only a week (it was later extended due to a nationwide bank strikes). The main objective of the income scheme is to generate optimal returns consistent with moderate levels of risk. The fund aims to achieve its objective through a 100 per cent exposure debt and money market instruments. The fund is available in two flavours, regular income plan and income cumulation plan. The fund offers facility to avail benefits under Section 54 EA/EB. The fund carries an entry load of 1 per
cent while exit is at Net Asset Value (NAV). The minimum investment is Rs 2000. The fund also offers systematic investment and withdrawal plans. The growth funds of Reliance have been reasonable performers. The close-end growth fund, Reliance Growth has been the top performing equity fund in the six months ended November 30, posting an annualised return of 25.96 per cent. The fund has been among the top two performers in the past quarter and one year. The fund has appreciated by an annualised 10.76 per cent since launch. Reliance Vision has also been among the top two performers over the past year and has appreciated by 26.91 per cent. The fund has grown by an annualised 7.17 per cent since launch. However, it must be pointed out that despite their stated objective, both the funds are not pure equity funds. As on May 30, 1996, Reliance Vision had a 27 per cent exposure in debt and money market and Reliance Growth had a 44 per cent exposure. The debt exposure has helped the fund in the uncertain equity
market. Unless Reliance decides to put in its own money, given the present clutter in the open-end income segment, Reliance Income Fund is unlikely to attract major inflows during the initial offer. Reliance Industries had committed Rs 15 crore in Reliance Vision (out of a capital of Rs 54.68 crore) and Rs 5 crore in Reliance Growth (unit capital of Rs 20.93 crore). According to the AMC, the aim at present is to help the scheme take off and market it at a later date (when the interest rates go up or down). There is already a clutter in the open end income segment with eleven income funds having been launched this year. At the present juncture, it does not make sense to commit to Reliance Income. Most of the other funds already have a track record. Yet, if the interest rates rise, (and the fund maintains a substantial cash position) it could turn out to be a dark horse. In the long term, the fund should keep pace with other funds in the segment.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
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