Reliance Banking Fund

Reliance Banking Fund is one of the top performers in its category. This fund is managed by Shrey Loonker and Sunil B Singhania. In the global economic crisis of 2008 the Indian banking sector emerged unscathed despite heavy liquidity crunch. This fund has shown consistent performance levels since its inception in 2003. Sector funds are risky to invest in. This fund is suitable if you are looking to make opportunistic returns.

Where does Reliance Banking Fund invest your money?

Reliance Banking fund is a banking sector fund which means your money will be invested in giant, large and medium size companies in the banking and financial services sector. Its portfolio is currently 52.38% exposed to stocks of large companies, 41% to stocks in medium size companies and close to 2% in stocks of small companies.

Suitable for what?
  • Creating wealth
  • Lifestyle needs
Not Suitable
  • Child's Education
  • Child's Marraige
  • Retirement Plans
  • Home Purchase
  • Short term needs
How much to invest?

Minimum one time investment is Rs 5000 and minimum SIP is Rs 100 per month. Do not make Reliance Banking as part of your core portfolio. Core portfolio is investments that are made for your basic goals and makes up about 70% of your investment portfolio. Reliance Banking Fund can be part of your satellite portfolio. Do not do the mistake of investing in too many mutual fund schemes. At any point of time do not have more than two mutual fund schemes in your core portfolio.

Our recommendation for fresh investment
Our recommendation for existing investment
How has Reliance Banking performed in the past?

If you had invested Rs 1 lakh when the fund was launched in May 2003 your value of investments would be around Rs 11.03 lakhs. If you had invested Rs 1 lakh five years back it would have become Rs 1.97 lakhs. The performance has been better than other large cap mutual funds. The fund has been giving a whopping 15% return every year for those who stayed invested for the last 5 years.

Assume you had invested Rs 10,000 every month in HDFC Equity Fund through SIP for the past 5 years today you would have around Rs 9.53 lakhs.

How will Reliance Banking perform in the future?

Needless to say no one can predict the future of markets. We have firm belief in the future prospects of the Indian economy. If the Indian economy grows at 9% then the leading companies tend to do well. When the companies do well their stock prices follows their performance. So if you expect the economy to grow at 8% then you can expect top performing mutual funds to give you returns in excess of 14%.

Mutual fund schemes that have exposure to mid size companies tend to show results when their bet on few companies comes true. We advise you to avoid too much of star gazing and future prediction. Be reminded that equities are one of the asset classes that have the potential to beat inflation.Your aim for core portfolio should be to beat inflation.

When to review?

Once you invest in the fund do not get into the habit of checking the NAV daily or monthly. Review the performance once a year. Too much attention is not good.

What charges apply?

A onetime fee of Rs 100 is charged on investments over Rs 10, 000 made through distributors. If you are a first time investor in mutual funds an additional Rs 50 is charged to cover KYC expenses. This is deducted from your investment and can be skipped if you buy directly from the mutual fund via their website or offices.

If units are sold within a year an exit load of 1% is deducted from your total returns. No exit load applies for units withdrawn post one year. Expense ratio of Reliance Banking Fund is 2.43%. This is charged to recover the fund management company’s expenses on securities’ transactions, commissions, registrar fees, etc. Your mutual fund returns will be total returns less expense ratio.

When to enter?

Now! There is no good time to invest rather than now. Do not try to time the market and especially if it is an SIP. Do not follow news channel and other experts trying to know the right time to invest. In the long run it does not matter. Mutual fund is unlike a stock where you are looking at the right price. This job will be done by the mutual fund scheme manager. If you have planned your investments and decided on the amount you want to invest do not think further, just go ahead.

When to exit?

Withdraw when your goals are closer to achievement. Do not remove the money when the markets go up or down. Do not panic. Stick to your goals.

What are the tax implications?

The returns in a mutual fund are absolutely tax free, provided you did not withdraw within 1 year. Reliance Banking Fund does not qualify for sec 80C ELSS benefits.

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