Fund review: Reliance Top 200 Fund

Markets have run up sharply in the past one year. In the same period, there has been no clear signs of improvement in earnings. In such a situation, the risks associated with large companies are lower than mid-and-small-sized companies given their established market share, relatively high corporate governance and immediate brand recall. Large-sized companies are unlikely to disappoint on earnings growth in the next 2-3 years. Given these factors, investors can consider Reliance Top 200 scheme, which invests 70-80 per cent in top 100 companies and remaining in the mid-and small-sized companies.

Fund managers Sailesh Raj Bhan and Ashwani Kumar, who have been managing the scheme since June 2007, consider two key factors before investing. First, they focus on companies which are leaders in the sectors in which they operate. While selecting such companies, they focus on the golden rule of growth at a reasonable price. Second, while selecting companies in mid-and-small sized category, they focus on companies which have potential operational or business edge.

This could be distribution chain or stable and growing clientele. Considering these factors, the fund managers have invested in themes such as corporate lenders (PSU and private sector) and companies in sectors which largely capture economic recovery such as automobiles, engineering and materials.

In the past six months, the fund managers have invested in stocks like Amara Raja Batteries, Aurobindo Pharma, Marico, Bajaj Auto and Cadila Healthcare.