Fund of Forth night

Reason for recommendation
The Indian equity market has been volatile in the last one month due to various factors including falling rupee, high crude oil prices and corporate earnings growth. The equity market has already fallen by more than 10 per cent from its current high. Therefore, it makes perfect sense to invest in balanced funds that also invest in debt which protects the downside risk to a certain extent. Reliance Equity Hybrid Fund, which was earlier known as Reliance Regular Savings Balanced Fund is one of such funds that invests a quarter of its corpus in debt instruments. Even in debt instruments, they have majorly invested in AA+ rated funds. Besides the debt instruments, what is also in favour of this fund is major allocations to large-cap stocks, which are less volatile than small and mid-cap stocks. Large-cap stocks share 66 per cent of the total corpus while small-cap and mid-cap stocks together form around 12 per cent of the fund’s AUM. Coming down to the sector allocation of the fund, financials share 25.6 per cent of the total asset under management followed by construction, which corners around 12.29 per cent of total corpus. Any other sectors have less than 8 per cent of total AUM.

Well-diversified portfolio helps to ride volatility in a better way. In terms of stocks, the major holding of the fund is in HDFC Bank, Grasim Industries and Infosys. All these stocks have weathered the current volatility in a better way and we believe it will continue to do so. Hence, this fund is suitable for everyone at the current juncture.