Reliance MF creates history with country's first ever Rs 5,000 crore fund

Reliance Equity Fund, a New Fund Offering (NFO) from Reliance Mutual Fund, has become the largest ever fund in the country and the first to cross Rs 5,000 crore in asset size. The NFO, which closed on 07 March 2006, has reportedly collected around Rs 5,200 crore.

The Reliance Equity Fund is a diversified equity scheme, aiming to invest in the top 100 companies by market capitalisation, which are also included in the derivative segment. The fund would have a very high exposure to equity with an allocation of more than 75 per cent and would be benchmarked against the CNX Nifty index.

UTI Mastergain, launched during the post-reform bull rally in 1992, was till now the most successful fund offering. The fund collected over Rs 4,400 crore, but its performance was way below par as the markets declined substantially. Last year Mastergain was renamed UTI Equity Fund and the net assets have come down significantly to around Rs 1,500 crore.

As of February end, Reliance Mutual Fund had a total of Rs 16,859 crore in assets under management, making it the fifth largest fund house in the country. UTI MF is the market leader with Rs 27,619 crore under management followed by Prudential ICICI with Rs 21,367 crore, HDFC with Rs 20,122 crore and Franklin Templeton with Rs 17,996 crore in assets under management as of February end.

After including the Reliance Equity Fund, Reliance MF would become the second largest fund house in the country behind UTI and the largest in the private sector. Prudential ICICI has been holding this position for the last many years.

Such large NFO would also have a significant impact on the equity markets, which are seeing huge liquidity flows. NFOs had collected a significantly large sum in January 2006, which supported the market rally in February. If the inflows into new MF schemes continue, markets will find it easy to sustain the momentum.