New Managers Appointed for Reliance Vision Fund; Can We Expect a Comeback?

Read the article to know whether Reliance Vision Fund can make a comeback or not along with valid reasons.

Reliance Vision Fund is one of the oldest schemes of Reliance Mutual Fund which has a glorious past of providing phenomenal returns to the investors. The historic top performing large and mid fund has been facing controversies in the last few years and questions have been raised upon the management staff due to lower returns. After giving enough opportunity to fund manager Mr Ashwani Kumar for rectifying the performance stats, the AMC decided to appoint new managers for the scheme in May 2019. The decision has been welcomed by the investors and experts and improvements in the performance can already be witnessed.

Why Reliance Vision Fund was Unable to Perform Well?

Reliance Vision Fund follows the mandate of large and mid-cap mutual fund and the ex fund manager Mr Ashwani Kumar included aggressive mid-cap stocks in the portfolio. A blend of growth and value investment style was followed and the growth-oriented stocks were targeted at attractive valuations. The mid-cap stocks have failed to deliver the expected gains in the last few years and the large-cap stocks selected by the manager were unable to balance the returns of Reliance Vision Fund. The fund has an impressive history of delivering exponential returns, but the trailing returns for the last 1, 3, 5, and 10 years are below the category average and benchmark. The ratings of the fund have been dropped to 1 star by every rating agency and investors have been avoiding the scheme for the last few years. Many investors have deserted away from the scheme to switch to a better performing fund while a few are still invested in hope of a comeback.

Expectations From New Managers

After giving enough opportunities to ameliorate the performance stats, Reliance Mutual Fund decided to change the manager in May 2019. Mr Ashwani Kumar has been replaced by the duo of Ms Meenakshi Dawar and Mr Sanjay Doshi. Reliance Mutual Fund, as well as investors of Reliance Vision Fund, have high hopes from the newly appointed managers. However it is not easy to mitigate the beaten down returns of long term but within 2 months after appointment, the rankings of the returns can already be seen to improve. It may be too early to judge the performance of newly appointed fund managers but the stats have been improvising due to change in the investment style and strategy. If things go similarly for the next 1-2 years, we can expect the fund to regain the ratings it had in the past.

Both the fund managers are highly talented and have impressive records for asset management. Ms Meenakshi Dawar is a B.Tech from IGIT New Delhi and PGDM from IIM Ahmedabad. She was previously associated with IDFC Mutual Fund and is highly experienced in handling equity investments. Mr Sanjay Doshi has more than 11 years of experience in the capital market and worked with various financial firms. He is ACA, MBA, and CFA.

What did They Change the Investment Strategy?

After getting appointed, the fund managers increased the proportion of holdings in large-cap stocks as the current market conditions have been favouring the market leaders. In terms of sectoral allocation, holdings in the financial and technology sectors have been reduced while the construction and engineering companies have witnessed an increase in the holdings. Bharat Electronics and Reliance Industries are the new entrants in the portfolio due to strong growth potential.

Can We Expect a Comeback?

The fund managers are highly experienced and the portfolios managed by them previously have delivered impressive returns. They make better calls according to the market trends and investment objective and in the near future, investors can expect correction as the returns have been gaining momentum in the last 2 months. The long term deprived performance cannot be rectified in the short term but for the new investors, this can be the right time to start an investment as the fund is getting back on track.

Whenever the stock selection range is wide, the strategies and abilities of the fund manager play a vital role in shaping the outcome from the scheme. As Reliance Vision Fund can have any stock in the portfolio from the top 250 stocks traded on Indian stock exchange, the stock selection strategy of the fund manager is majorly responsible for performance. The strategies of Mr Ashwani Kumar were not helping out the investors but the new fund managers can bring Reliance Vision Fund back on the top performers' chart in the Indian mutual fund industry.