Nature’s way

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of scheme; Reliance and DSP being open-ended and Sundaram being closed ended with a lock-in period of three years.

One more difference in the investment objective between the funds is that Reliance Natural will not invest in non-conventional energy. Now here, if in the near future we see lot of companies, which are into non-conventional energy getting listed on the exchanges, then we could see Sundaram and DSP benefiting from this additional advantage, which Reliance doesn't have.

The response for these funds was very good considering the asset size. Sundaram Thematic fund collected about Rs 2,400 crore at the market due to a positive condition in the equity market. Reliance Natural fund was able to get the second highest collection ever in any fund and the asset size is Rs 5,200 crore. These funds have included investing in overseas markets in their investment strategy depending upon the limit prescribed by the regulator.

Performance of the existing funds

We have seen various mutual funds came out with thematic or sectoral funds on banking, power, FMCG, IT, etc. There was a mixed performance by sectoral funds, as FMCG and IT had delivered negative returns, and banking and power delivering very good returns in the previous bull period. There was only the UTI Petro fund, launched in 1999, which invested only in petroleum companies. However, it was renamed to UTI energy fund and simultaneously widened its scope to cover the entire energy sector. Since inception, the fund has delivered returns of 22.21% and 29.97% in the last five years. However, post name-change, the fund has delivered 11.53%. The same situation is with other newly launched ones. Sundaram has declined from its face value of Rs 10 to Rs 8.05, giving -21.30% and Reliance natural -2.7% returns. We have seen a high volatility with sudden decline in the market from its all time high due to stretched valuations.

Opportunities