Fund Review - Reliance Capital Builder Fund IV - Series A

Devansh Mehta, Senior Investment Advisor, IIFL | October 06, 2017 17:41 IST

The fund will invest in high conviction 20-25 stocks in at least 4-5 sectors. Besides, the fund will buy a Nifty 50 put option at a later stage to limit the downside risk. However, it will depend upon the market condition.

Reliance Capital Builder Fund IV is a close-ended equity oriented fund which will invest across sectors and market capitalization.

The fund will invest in high conviction 20-25 stocks in at least 4-5 sectors. Besides, the fund will buy a Nifty 50 put option at a later stage to limit the downside risk. However, it will depend upon the market condition.
 
The fund will primarily invest in three themes - Rural Recovery, Pharma and Corporate Lenders. Below are the rationales of investing in the themes:
 
Recovery in Rural Demand
Consecutive 2 years of good monsoon. High MSPs in kharif crop in 5 years and farm loan waivers in few states to increase the disposable income. Higher government spending on rural infrastructure. 3 crore houses to be built in rural India under Housing for All Scheme.
 
Low valuation in Pharma sector
In the last 2 years, the sector valuation is lowered by ~30% and the sector is trading below its historical valuations. Domestic story remains strong in long term as penetration is rising.

Private Capex to revive
NPA cycle has peaked and NPA resolutions are underway. The valuations of corporate lenders are relatively reasonable compared to retail lenders. Recapitalization of PSU banks to boost the lending.
 
Below are the scheme details: 

Scheme Details

Fund Type

Close Ended Equity Oriented Scheme

NFO Period

Sep 29, 2017 – Oct 13, 2017

Benchmark

S&P BSE 200 Index

Tenure

3 years from the date of the allotment of the units

Fund Manager

Ms. Meenakshi Dawar and Ms. Jahnvee Shah (Overseas Investments)

Allocation (%)

Equity: 80-100%

Debt: 0-20%


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