Reliance Infrastructure Fund: Review & Analysis of NFO

The Reliance Mutual Fund house has come out with its latest NFO or New Fund Offer. It's called the Reliance Infrastructure Fund. Seeing the recent positive trends in the stock market and the stable government formation, it is betting on the Infrastructure growth in the country. Also, the good response received by the ICICI Prudential Target Returns Fund (Review & Analysis) where it managed to collect 800 Crore Rs. from the market, has also sent a positive message to the mutual fund industry. Hence Reliance, which is one of the big mutual fund houses of India, has come out with the Reliance Infrastructure Fund.
What is the basic investment strategy or ideology for the Reliance Infrastructure Fund?
It's obvious to everyone now. There is going to be a stable government at the center, led by an economist. Stability so there can be progress and that will be lead by improvement in infrastructure. Hence, this Reliance Infrastructure Fund aims to generate returns by investing in the infrastructure companies under the assumption that they will benefit and give positive returns. They expect government funding, private equity investments, Public Private partnerships PPP, Foreign investments, etc. to be the source of money for infrastructure companies and hence they wish to benefit from the same.

Related: Tata Growing Economy Infrastructure Fund

Which specific sectors and areas will the Reliance Infrastructure Fund invest in?
There is a long list available. Some of them are indicated below:
Airports
Banks, Financial Institutions & Term lending Institutions
Cement & Cement Products
Coal
Construction
Electrical & Electronic components
Engineering
Energy including Coal, Oil & Gas, Petroleum & Pipelines
Industrial Capital Goods & Products
Metals & Minerals
Ports
Power and Power equipment
Road & Railway initiatives
Telecommunication
Transportation
Urban Infrastructure including Housing & Commercial Infrastructure
Mining
Aluminum

What are the details of Reliance Infrastructure Fund?
The Reliance Infrastructure Fund is an open ended scheme so you can buy and sell units at the NAV values every business day. 65% 10 100% of the money will be invested in equities or stocks, rest will be debt and money market instruments and cash.

Available plans for investments:
Growth Plan: Growth Option & Bonus Option
Dividend Plan: Dividend Payout Option & Dividend Reinvestment Option

Minimum investment amount for retail investors is Rs. 5000.

Which benchmark index will be tracked by Reliance Infrastructure Fund?
It will be BSE 100.

What is the load structure: entry load and exit load for Reliance Infrastructure Fund?
For retail investors upto 2 Crores of investment, 2.25% is the entry load (isn't that big???)

Exit load: 1% if redeemed/switched on or before completion of 1 year from the date of allotment
Nil if redeemed/switched after completion of 1 year from the date of allotment

However, that high entry laod of 2.25% will not be charged if the investor applies directly to the Reliance Mutual Fund House.

Is there any Systematic Investment Plan or SIP plan available for investing in Reliance Infrastructure Fund?
Yes. SIP is availble in the Retail Plan of Reliance Infrastructure Fund.

What is the NFO period or dates for Reliance Infrastructure Fund?
The NFO period is currently open - from 25th May 2009 to 23rd June 2009. Scheme to re-open on July 22nd , 2009.

Mutual Fund NFO offers Currently Open: July 2009
- DSP BlackRock World Energy Fund NFO: Review & Analysis

- Sahara Super 20 Fund NFO Review & Analysis

- Religare Business Leaders Fund NFO Review & Analysis

- Franklin Build India Fund FBIF NFO Review & Analysis

What's the final summary and risk of investing in Reliance Infrastructure Fund?
The Reliance Infrastructure Fund is another simple mutual fund which is betting on the growth of infrastructure in the country. So nothing so special and exciting about the mutual fund. Like any other mutual fund, this fund will try to generate returns. The long list of areas/sectors they have provided for investing, covers almost everything in the infrastructure region.
The big question is, will this fund deliver?
That will happen only if the fund managers really identify the gems in the infrastructure sector to maximize the returns. So as like any other mutual fund or fund manager, you have to bet on the fund manager's performance.
Then there is danger for this infrastructure sector to underperform. What if the global problems continue and there is no foreign or private investment coming to infra sector. What if other internal problems block the growth of this sector. So it's the investor's call

Reliance Equity Linked Savings Fund–Series I (Tax Saving)–Review

Reliance mutual fund has come out with its Reliance Equity Linked Savings Fund – Series I. It offers tax benefits and that is the reason that the time of launch of the NFO was scheduled for the financial year end.
In this article, I’ll attempt to provide a review of Reliance Equity Linked Savings Fund – Series I. It should help you in taking a decision about whether one should invest in Reliance Equity Linked Savings Fund – Series I.

Typically, this is also a kind of ELSS or Equity Linked Savings Scheme that offers tax benefits and due to this, the lock-in period is there of 3 years. Hence, you cannot take out your invested money before 3 years.

The working principle of this scheme is same as that of any other mutual fund. You money is invested into shares and debt instruments with a given level of exposure and the fund manager will attempt to pick the best performing stocks so as to generate capital appreciation in the long run. The Reliance Equity Linked Savings Fund is having an investment horizon of 10 long years.

Asset Allocation in Reliance Equity Linked Savings Fund

Equities will be having a corpus of 80% to 100% while debt and money market instruments will make up for the remaining 20% to 0%. Hence, primary exposure is for equity, and the fund manager may invest even in overseas instruments like ADR/GDRs. Ultimately, you are giving away the decision making power to the fund manager for him to play around with your money.

You have 2 Options Available for returns and investments under Reliance Equity Linked Savings Fund:
• Growth Plan - Growth option

• Dividend Plan - Dividend payout Option

The Reliance Equity Linked Savings Fund will be tracking the Benchmark Index: BSE 100.

Minimum Investment Amount:

Reliance is easy on the investment amount – just Rs. 500 and in multiples of Rs.500/- thereafter. However, as per section 80 C of the Income Tax Act, 1961, the tax benefit will be available only upto a maximum amount of Rs.1,00,000/-.


SIP: Systematic Investment Plan is Not Available for Reliance Equity Linked Savings Fund
Charges

Recurring Expenses of Reliance Equity Linked Savings Fund

Type	Upto (%)
Investment Management Fees	1.25%
Marketing Expenses	1.00%
Operational Expenses	0.25%
Total	2.50%

Ultimately, whether or not your investment in Reliance Equity Linked Savings Fund produces any profit, your money will be deducted necessarily to the extent of 2.5%. However, you do get tax benefit, but it comes at a cost of 3 year lock-in period.

It is claimed that during the NFO, there is NO ENTRY load for Reliance Equity Linked Savings Fund. The exit load is also quoted as NIL after 3 years, but with an asterisk (*). There are some calculations about amortization & redemption between 4th and 10th year, which ultimately mean that your exit load is NOT NIL. You will DEFINITELY have to pay some exit load if you decide to take out your invested money any time between 4th and 10th year in Reliance Equity Linked Savings Fund.

So, tax saving hungry investors can look for investing in this Reliance Equity Linked Savings Fund. Three year lock-in period and tracking the benchmark of BSE 100 which includes lots of midcaps may help you in making good returns, along with tax benefit.

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