Diversified equity funds are so termed due to two key reasons. For starters, these mutual funds do not focus their investments on a specific sector or equity investments of a specific market cap. For example, the same fund may be investing in a small-cap media company as well as a large cap infrastructure company. Through such diverse investments, the mutual fund is able to hedge its bets and decrease the overall risk to the scheme. This is because while large cap investments are considered to be relatively less risky and capable of offering stable returns, mid and small cap investments are potential high growth investments with a higher risk index.
Reliance Vision Fund is an open-ended diversified mutual fund, which is designed to provide long-term capital appreciation for investors who are risk tolerant with respect to equity investments. Though a major portion of the portfolio would be invested in equities and equity-linked schemes of companies featuring various market cap, some of the capital under management of the Reliance Vision Fund would be invested in potentially less risky and constant return investment options such as debt and money market investments.
Investment objective of Reliance Vision Fund
The key investment objective of the Reliance Vision Fund is to generate long-term risk-adjusted capital appreciation for the investor, by investing in various large and mid cap equity investment options. Debt and money market funds would form a smaller portion of the portfolio, which would partially offset the inherent risk of the high equity exposure of this mutual fund. Additionally, these investments would provide additional liquidity to the Reliance Vision Fund portfolio. Another key feature of the Reliance Vision Fund would be to maintain a sector non-specific approach for investing in various companies. This would ensure that sudden market shocks to a particular sector would not significantly affect the performance of the scheme as a whole.
Investment Strategy Overview of Reliance Vision Fund
The Reliance Vision Fund would focus on making various large cap investments with additional tactical exposure to mid-cap investment options in order to promote a higher rate of growth for the investor. The mid-cap investment options will be selected tactically in order to promote a higher growth but with minimum additional risk to the investments made in such companies. The focus of this fund would be to seek out and invest in visionary companies, which are already market leaders in their sector or are in the process of emerging as market leaders based on their previous performance and future indicators.
The large cap focus of the Reliance Vision Fund is designed to protect investors from the periodic market volatility that may result from equity investments even when made through a mutual fund. Additionally, this high exposure of the mutual fund to large cap stocks would also result in the availability of a higher degree of liquidity in the portfolio of the fund. The Reliance Vision Fund will be backed and managed by an experienced team and fund manager who would together apply their skills towards promoting a growth-oriented strategy for the scheme and thereby generate superior risk-adjusted returns over the medium to long term.
Reliance Vision Fund Information and Statistics
Launch Date: The Reliance Vision Fund was first opened for individual investor’s investment on the 8th of October 1995.
Fund Type: The Reliance Vision Fund has been classified as an open-ended diversified equity fund. Being an open-ended fund means that an investor can invest in or exit from the mutual fund at any time of his/her own choice. Additionally, being a diversified equity fund, a major portion of the mutual fund portfolio of consist of market equity (shares) and various equity-linked derivatives, which provide the fund with a potential of high growth. A smaller portion of the fund’s investments may be made in less volatile and more consistently performing debt as well as other money-market instruments.
Minimum Investment: The minimum lump sum investment allowed into the Reliance Vision Fund is Rs. 5000. For higher amounts, multiples of Re. 1 over Rs. 5000 is acceptable as investment amounts for the Reliance Vision Fund. In the case of SIP investments, Rs. 500 each are applicable to investment for the fund if done for a minimum period of 12 months.
Risk Category: As a majority of the investments made by the Reliance Vision Fund are focused on market-linked equity investments, it is prone to periodic volatility due to sudden changes in market condition. This provides the mutual fund with a high potential for capital appreciation, however, the principal amount invested may also be at risk periodically. To offset this risk the fund may decide to invest in various money-market instruments from time to time as well. Keeping this in mind, this diversified equity scheme from Reliance AMC has been classified as moderately risky.
Entry/ Exit Load: As per SEBI circular and current regulations, the entry load for investing into the Reliance Vision Fund is nil. Exit load of 1% is applicable in the case of Reliance Vision Fund units that have been held for less than a year before they are redeemed or switched by the investor.
Fund Manager: Mr. Ashwani Kumar is currently managing the Reliance Vision Fund. He is engaged as the senior equity manager with Reliance Nippon Life Asset Management Limited as of now. Before he joined Reliance Mutual Fund AMC, Mr. Kumar was working with Zurich Asset Management Co. India as a Senior Research Analyst. In the Senior Research Analyst capacity, he was focused on tracking the movements of key economic sectors such as automotive, engineering and metals. He has a Bachelor’s Degree in Science along with an IIM Bangalore PGDM Degree in Finance.
Tax Treatment of the Reliance Vision Fund
The Reliance Vision Fund is a diversified equity fund, which is open for an investment round the year and by any individual investor who is legally eligible to invest in India as per SEBI guidelines. Equity mutual funds are eligible for short-term capital gains taxation rules. Thus if an investor redeems or switches their Reliance Vision Fund investment units prior to completion of 1 year from the time the investments were assigned, the short term capital gains tax will apply at the applicable rate. On the other hand in case units redeemed or switched have been held for over a year until the time of redemption, then the proceeds are tax exempt. The short term capital gain tax is applicable in addition to the exit load applicable in the case of redemptions/switches made before completion of the 1-year investment term.
Plans and Options Available with Reliance Vision Fund
Direct Plan: The direct plan variant of Reliance Vision is available to investors who are investing directly with Reliance AMC either through the offline route or the online route. This option has a lower expense ratio as compared to the regular plans, which make it is a better investment option from the perspective of returns as compared to regular plans. In the case of direct plans, there are also no brokerage or portfolio management fees to contend with. In the case of the direct plans, options available include dividend and growth options.
Regular Plan: In case the investor makes the investment through a brokerage or any other designated third party such as Paisabazaar.com, the individual investor can opt for the regular plan. In the case of some brokerages, the investor may be charged brokerage or portfolio management fees; however, this is not the case when investing through the Paisabazaar.com platform. In this case, the NAV is slightly lower and the options available include the dividend reinvest/payout and the growth options.
Dividend Option: Dividends refer to a payout commensurate with the number of units that an investor holds and this is possible only when the fund makes a profit. In the case of the dividend payout option, the dividend is automatically transferred to the investor’s registered bank account and can be withdrawn by the investor for any purpose of his/her choice. Alternately, there is the dividend reinvest option and in that case, the dividend earned is automatically converted into units of the Reliance Vision Fund as per the applicable NAV. Whenever a dividend payout occurs, the price of mutual fund units decreases by the same amount.
Growth Option: In this variant, any profits that the Reliance Vision Fund earns are invested back into the fund and this increases the fund’s AUM and leads to an increase of its NAV making the fund more valuable. While the investor keeps capital invested in the fund, there is no profit or loss that is possible, however, the higher NAV leads to an increase in the payout that the investor can potentially receive when redeeming/switching the fund’s units. This is the key reason why the growth option is preferred by investors seeking capital appreciation on the medium to long term.
Reliance SIP Insure Scheme for Reliance Vision Fund
Reliance Vision Fund is one of few designated funds offered by Reliance Mutual Fund AMC, which is eligible for availing the unique Reliance SIP Insure plan offered by the AMC. The mandatory requirement for this scheme is the SIP investment in the Reliance Vision Fund or any other designated fund. As per the features of the Reliance SIP Insure Scheme, individual SIP investors are eligible to receive free of charge life insurance benefit commensurate to their SIP investment with a maximum cap of Rs. 21 lakhs. The cost of this group insurance plan will be borne by Reliance AMC and apart from registering for the service, an individual investor is not required to take additional action to avail the SIP Insure benefits. The limits to the sum insured under this plan are as follows:
- 1st Year up to 12 installments, the sum assured equals 10X the monthly SIP.
- 2nd Year from 12th to 24th installment, the sum assured equals 50X the monthly SIP.
- 3rd Years i.e. 24th installment onwards, the sum assured equals 120X the monthly SIP.
The above amounts for sum assured are at present capped at Rs. 21 lakhs for each investor. Additionally, this insurance coverage will continue to stay even in case the SIP is stopped after 3 years. However, redeeming the units or switching before the 3 year period would lead to discontinuance of the SIP Insure Scheme coverage for the individual investor. In case the units are kept by the investor even after completion of the 3 year SIP period,
Leading Investments of the Reliance Vision Fund
The following are some of the leading sector-wise investments of the Reliance Vision Fund*:
|Investment Sector||Top Holdings|
|Banking/Finance||ICICI Bank, State Bank of India, Bank of Baroda, HDFC Bank, Axis Bank, etc.|
|Automobiles/Auto Ancillaries||TVS Motor Company, Maruti Suzuki India, Automotive Axles, Federal-Mogul Goetze (India), Tata Motors, etc.|
|Software||Infosys, Tata Consultancy Services, HCL Technologies, etc.|
|Industrial Capital Goods||Honeywell Automation, ABB India Limited, BEML Limited, GE T&D India, Siemens Limited, etc.|
|Others||Reliance Communications, Divis Labs, Indian Oil Corporation, Aurobindo Pharma, Bharti Airtel, Linde India, Bharat Petroleum Limited, UPL Limited, ITC Limited, etc.|
|Non-Equity Investments||Reverse Repo/CBLO, Cash Margin (Derivatives), etc.|
*This list of holdings is for illustrative purposes only and subject to periodic change.
How to Invest in Reliance Vision Fund through Paisabazaar.com
Paisabazaar.com offers prospective investors the option of a free investment account that any Indian resident over the age of 18 years can avail provided they are over the age of 18 years and can complete the KYC procedure mandated by SEBI guidelines. Currently, the Paisabazaar.com platform supports Aadhar-based KYC, which make the process of verification highly streamlined. An investor registered with Paisabazaar.com is free to invest with any of our partner fund houses including Reliance Nippon Life Asset Management Company also known as Reliance Mutual Fund AMC. Investors also benefit from the fact that the Paisabazaar.com mutual fund platform does not require investors to pay any brokerage or portfolio management charges for investing in the Reliance Vision Fund.
Payments towards completing the investment can be completed via the Internet Banking platform of various scheduled Indian Banks. Options available for retail investors for the Reliance Vision Regular plan include growth, dividend reinvest and dividend payout. Redemption facility is also available through the same online platform, which makes it easier for an investor to make their investments throughout the year and any time of the day from the convenience of their home/office.