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POSTED BY ON February 10, 2012 11:48 pm COMMENTS (8)
Hi all,
I have been investing in the Reliance Growth fund via SIP of Rs.4000 per month since 22 months.
I find that this fund has not been performing well in the recent past.The current value is Rs.84,328.64.My horizon is for 10 years.Should I continue with this SIP or stop it and invest in better performing fund?In general, what should be the criteria to stop the SIP..how do I decide?
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Dear Phani, there may be several ways to decide. One is, if fund is not able to beat it’s benchmark for a period of 12-15 months in other words prolonged below par performance. Another one is, if there is sudden change in the over all philosophy or mandate of the fund.
Thanks
Ashal
As on date, Reliance Growth has the highest AUM among these funds.So, I understand that AUM should be a major deciding factor and not the recent performance
Can you guys please advise on my second question also. “what should be the criteria to stop the SIP”.How do I decide whether to stop investing in any MF sip.
Dear Phani, it’s good to compare a fund among it’s peers. As rightly pointed out by dear BanyanFA, being a mid& small cap fund, the AUM of Rel. growth is it’s own enemy now. While comparing the return also compare the as on date AUM of all the 3 funds as discussed above by you?
Thanks
Ashal
Hi Phani,
Even I invest into Reliance Growth Fund.
Not all funds remain top category within a short duration. Just note down the list which you have written above and you shall see that in next 2-3 months another set of funds shall replace them. Reliance Growth fund is one of the few available funds which have been for a while and have been giving consistent return over this duration. Just have a look at its AUM – which speaks for itself in terms of the trust the fund manager is attracting.
A good fund is which gives consistent return over a period of time.
Regards
BFA
Hi Ashal,
When I said about good performance, I meant the fund being in the top 5 performing funds in similar category.
I compared the performance of similar funds in the mid & smallcap funds category , namely IDFC premier equity and HDFC micap opportunities. Reliance Growth is lagging behind them as given below.I got the data from valueresearchonline
Name 1-year return 3-Year return 5-Year return
HDFC Midcap 15.06% 38.63% —
IDFC Premier 14.82% 38.12 27.90
Reliance Growth 1.92 27.92 9.04
Dear Phani, may I know what’s the so called good performance from your view for the fund in question.
Disclosure – I do have personal investment in the fund in question.
Thanks
Ashal
You should invest in a fund, which will perform better in the future, not which has been performing well in the past (the criteria for Ranking and star-ratings, etc).
Reliance Growth is a good fund and I would not recommend changing it. (the underlying investment process, fund manager and AMC are consistent in their approach, and so should you). Because of its mandate of going with mid and small cap space, and because of its size, the fund has to go with few large caps as well (which should be good, in term of volatility).
Just compare the returns of any other good funds in the same period, you will find that there is no statistically significant difference.
Moreover, I would like to congratulate you in getting a single MF (if that is correct). This alone is a very superior decision.
Reliance Growth is probably one of the good funds around. It is lagging behind due to its stock selection. Be patient with the fund – it shall turn around when it’s selected stocks rally.