RELIANCE DIVERSIFIED POWER SECTOR FUND

High voltage, high returns

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  India’s only power sector mutual fund comes with a high-risk, high-return profile. So, be cautious while investing in it
• Frequent power cuts in your homes this summer may have frustrated you, but that was also a subtle reminder of an opportunity that came with it. It’s called Reliance Diversified Power Sector Fund (RPSF).
• RPSF holds around 20 stocks. The fund manager follows a buy-and-hold philosophy and does not churn its portfolio frequently. RPSF manages its cash positions aggressively in search for any opportunities to buy.
• RPSF has tasted success in several power scrips, most notably in Siemens, Crompton Greaves and Jaiprakash Associates. RPSF’s growing corpus (Rs 1,176.3 crore in June 2007, up from Rs 552.2 crore in January 2006) does not bother the fund manager.
• Returns. RPSF has delivered strong returns since inception (April 2004; 60 per cent as against 34.3 per cent by its benchmark India Power index) on the back of the surge in infrastructure and power sectors. As on 29 June 2007, RPSF returned 88.9 and 65.7 per cent in the past one and three years respectively, as against 56.3 and 48.7 per cent by its benchmark index. Besides, Reliance MF enjoys a good track record across its equity and debt schemes. As RPSF is a sectoral fund, expect the fund to be more volatile than a plan-vanilla diversified equity fund.
  Against the 10th 5-year plan’s (2002-07) requirement projections of around 1,00,000 MW of electricity in the country, industry estimates claim that the power sector is on the right track. And in the thick of the action, spotting opportunities is RPSF with the potential to give you high returns, albeit with a much higher risk. Power cuts don’t look all that bad now, do they?