If an someone had invested Rs 4 lakh in 2003, his corpus would have turned over Rs 1 crore in less than 15 years, means investor's wealth has doubled in every 2.8 years in this fund.
Reliance Banking Fund, which had an asset under management of Rs 2,816 crore as of June 30, 2017, is one of the flagship funds of Reliance Mutual Fund. Started on May 26, 2003, the Reliance Banking Fund's net asset value (NAV) has grown from Rs 10 to Rs 263.24 on August 4, 2017, delivering a compound annual growth rate (CAGR) of 25.52 per cent over 14 year. It means investor's wealth has doubled in every 2.8 years. For example, if an investor had invested Rs 4 lakh in 2003, his corpus would have turned over Rs 1 crore in less than 15 years.
Reliance Banking Fund is a sector fund focused on the banking and financial services sector. This is an open ended equity fund having no entry and exit barriers. The fund aims to generate superior return through active fund management. The fund has outperformed its benchmark, Nifty500 Banks Index, by nearly 450 basis points since its inception.
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Banking and financial services sector has been one of the best performing sectors in India. Continued reforms by the government and increasing financial inclusion have benefited this sector over the years. More and more people in India are now moving from the informal lending to formal lending, which has helped the banking sector in increasing its penetration.
With returns from gold and real estate falling, more and more domestic savings is now channelized to financial savings, which has benefited the banking and financial services industry, say analysts.
Retail investors can invest in the fund through SIP (Systematic Investment Plan) route, which is considered a good medium to create long-term wealth. A check on the Value Research website shows that is you would have started a monthly SIP of Rs 1,000 in this fund on May 28, 2003, then your total investment of Rs 1.71 lakh by July 28, 2017, would have grown to Rs 9.6 lakh, a staggering 22 per cent CAGR.
Risks: Sector funds fall in the high risk, high return category of funds. If the particular sector does well, the sector funds deliver strong returns but if the sectors performs poorly than the returns could be below that of the broader markets. These funds are considered riskier than regular diversified funds.
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