NFO - Reliance Capital Builder Fund IV - Series C

Reliance Capital Builder Fund IV – Series C is a close ended equity which will primarily invest in small cap companies with some allocations to large cap and mid cap stocks. The fund will focus on domestic revival theme which can benefit from favorable events like lower interest rates, policy reforms, government capex etc.

Dec 09, 2017 02:12 IST India Infoline News Service

Reliance Capital Builder Fund IV – Series C is a close ended equity which will primarily invest in small cap companies with some allocations to large cap and mid cap stocks. The fund will focus on domestic revival theme which can benefit from favorable events like lower interest rates, policy reforms, government capex etc. The fund will invest in 60-70 stocks in different sectors which offer significant diversification.
 
The Fund will invest in the following key themes:

1.      Policy Reforms
With the implementation of GST, India has become a unified market which will reduce the cost of doing business, improved compliance, and increase efficiency and productivity. The demonetization and GST has accelerated the shift from unorganized to organized sector. Thus, companies which are operating in sectors where unorganized players have significant market share are like to benefit the most. Besides, the RERA has also brought the transparency in real estate sector which will boost the consumer sentiments. The bankruptcy code will help in resolving the NPA issues of banks. At last, digitization is also reducing the leakage and improving the delivery of government spending.
 
2.      Government Capex
Roads orders are up 8 times in last 3 years as FY2017 saw a record high projects awards of 16,271 km. In next 5 years, Rs6.92 lakh crore to be spent on road construction. Besides, government is targeting to complete 83,677 kms of roads including 34,800 kms of Bharatmala programme by 2022. Furthermore, Indian railway will invest Rs8.6 trillion till 2019 on decongestion, expansion and doubling etc. In addition, railway is also to electrify 33,000 kms in next 4 years. Government’s ambitious project, Housing for all by 2022, will also boost the infrastructure spending as government is targeted to build 2 crore houses in urban areas and 3 crore houses in rural India.
 
3.      Rural Consumption
The rural economy is also rebounding as nominal wage growth in rural India at increasing trajectory. The farm output is also expected to rise after two consecutive years of good monsoon. Besides, the MSP increase by 6% in 2017 in all crops which is highest in last 4 years. In addition, the centers allocation to MNREGA is at record high at Rs 48,000 in FY2018.
 
 
4.      China Opportunities
The production cost in China is expected to rise next year as the government starts levying Green tax and mandatory waste management to tackle pollution.
 
5.      Bank Recapitalization
The government has already announced Rs 2.11 lakh crore plan to recapitalize PSU banks. Such a large infusion will help banks to improve their capital adequacy ratio to meet BASEL III norms and resolve NPA issues. This will also enhance the credit growth.
 
The Small cap stocks have gone up but still there are many companies which are under-researched and potential high growth, thus scope for rerating. Besides, entrepreneurial spirit and scalability of business is high in small-cap companies. Thus, we recommended fund to aggressive investors who are ready to invest in small-cap companies.
 
Below are the scheme details:
Scheme Details
Fund Type Close Ended Equity Scheme
NFO Period Dec 01, 2017 – Dec 15, 2017
Benchmark S&P BSE 200 Index
Tenure 1185 days from the date of the allotment of the units
Minimum Allocation Rs 5,000 and in multiple of Rs 10 thereafter.
 

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