SWP Returns of Mutual Funds: Superb performance by Reliance Equity Opportunities Fund

If you had invested र 10 Lacs in Reliance Equity Opportunities Fund – Growth Plan – Growth Option, during the NFO (launch date March 28, 2005) and started withdrawing र 8,000 per month after one year then the current value of your investment would have been र 46.06 Lacs even after withdrawing र 9.84 Lacs through 123 SWP instalments of र 8,000 each (Based on June 16, 2016 NAV).

To come to the above conclusion we have presumed that the lumpsum investment of र 10.00 was made on the Scheme inception date i.e. March 28, 2005. We have also presumed that the monthly Systematic withdrawal of र 8,000 was started after one year on the 1^st of every month so that each and every SWP withdrawal amount becomes tax free (start date September 01, 2006).

Please look at the chart below to understand how we have selected the different options in the SWP Research Tool to get the results. You can also explore our SWP Return Calculator to explore SWP returns of any fund of your choice.

Source: Advisorkhoj SWP Calculator

SWP (Systematic Withdrawal Plan) results

From the above chart you can see that you would have withdrawn a total of र 9.84 Lacs till June 2016, through 123 equal monthly SWP instalments of र 8,000 each, thus, you would have got a tax free return of 9.6% every year. Even after withdrawing a tax free amount of र 9.84 Lacs, the current value of your investment is amazing र 46.06 Lacs!

You have withdrawn 123 equal instalments of र 8,000 from your initial investment of र 10.00 Lacs, and after two more SWP instalments you initial investment is totally exhausted. However, you current value is still a whopping र 46.06 Lacs! (Based on NAV of June 16, 2016).

The interesting point is that when the market was hovering around its life time high during March 2015, Reliance Equity Opportunities Fund – Growth Plan – Growth Option NAV on the SWP date of 02/03/2015 was र 78.2683 and the total value was at र 54.08 Lacs which is approximately र 8.02 Lacs more than the current value. Please note that you withdrew another 15 instalments from the highest value point of 02/03/2015 to till today’s value.

Download the cash flow in excel showing the details of SWP withdrawals, NAVs and values on respective dates – Click here

We have analysed similar samples with other Mid Cap funds and found that SWP returns of Reliance Equity Opportunities Fund – Growth Plan – Growth Option was one of the best amongst its peers.

About Reliance Equity Opportunities Fund

Reliance Equity Opportunities Fund is a very popular fund from Reliance Mutual Fund, in the Mid Cap segment. The Fund has an AUM of र 10,625 Crores (as on May 31, 2016). The fund is being managed by one of the well known fund managers, Mr. Sailesh Raj Bhan since inception of the fund.

Reliance Equity Opportunities Fund is one of the most consistently performing equity mutual funds in the Mid Cap Category. CRISIL, however, categorises this fund as Diversified Equity Fund and has given Rank 2 in Consistent performers - Equity Funds. This is an excellent fund to own if you are looking at diversification across sectors amongst Large and Mid Cap companies which are going to be benefited by ongoing economic reforms, FDI inflows and Infrastructural changes.

The 76% assets of the fund are currently invested in Financial, Services, Engineering, Healthcare and Technology.

The 3, 5 and 10 years annualised returns of the fund is quite impressive at 19.94%, 14.31% and 16.64% respectively (Based on NAV of June 16, 2016).

Lumpsum returns of Reliance Equity Opportunities Fund

Reliance Equity Opportunities Fund – Growth Plan – Growth Option has given excellent lumpsum returns. The current value of investment of र 10 Lacs made on the launch date (March 28, 2005), would be around र 70.00 Lacs, a CAGR growth of 18.92% since inception (Based on June 16, 2016 NAV).

If you had invested the same amount in S&P BSE 100 or CNX NIFTY then your accumulated amount would have been only र 30.87 Lacs and र 30.11 Lacs respectively (Based on June 16, 2016 NAV). Therefore, its return has beaten the return of both the Benchmarks by a huge margin.

Simply speaking your investment in Reliance Equity Opportunities Fund – Growth Plan – Growth option NFO has grown 7 times in 11 years!

Please check here Lumpsum Returns of Reliance Equity Opportunities Fund

To know lumpsum return of any fund, you may like to check our LUMPSUM RETURNS CALCULATOR

SIP Returns of Reliance Equity Opportunities Fund

The SIP returns of Reliance Equity Opportunities Fund – Growth Plan – Growth Option have also been very good! If you had started a monthly SIP of र 5,000 on March 28, 2005 (the launch date of the fund), then you would have accumulated a corpus of र 17.89 Lacs as on today (Based on June 16, 2016 NAV) whereas you had invested only र 6.75 Lacs through 135 instalments of र 5,000 each. During this period the fund has given a XIRR return of 16.40% which is one of the best amongst the peer group of schemes. Check SIP RETURN CALCULATOR

Further, if you see the chart below, you will notice that Reliance Equity Opportunities Fund has also beaten the CNX NIFTY and S&P BSE 100 Index with a huge margin as far as SIP returns are concerned.

Source: Advisorkhoj SIP Return calculator

You may try this tool TOP PERFOMING SIP FUNDS to check Top Funds of any category.

What is Systematic Withdrawal Plan

In a Systematic Withdrawal Plan (SWP), you regularly withdraw a fixed amount of money on a fixed date or dates from a fund. The amount to be withdrawn and the frequency of withdrawal/s are decided by the investor. You can withdraw a fixed amount weekly, fortnightly, monthly, quarterly or annually from your investment.

SWP withdrawals from an equity fund, after one year from the date of investment, is totally tax free as it is treated as a long term capital gains. It is an ideal investment option for investors with lumpsum investible surplus and looking for regular income from their investments and at the same time want to see their investments grow in value.

Try our SWP RETURN CALCULATOR to know SWP returns of your favourite funds.

Conclusion

Reliance Equity Opportunities Fund has given very good SWP returns since inception and may be a good choice for investors looking for regular income from their lumpsum investible surplus. The lumpsum and SIP returns of Reliance Equity Opportunities Fund have also been stellar and it has beaten the benchmarks with huge margin. Therefore, the fund maybe suitable for investors looking for long term wealth creation to meet their financial goals.

However, investors should note that past performance of mutual funds are no guarantees for future returns. Mutual fund investments are also subject to market risk and therefore investors must consult their financial advisors and check if investment in Reliance Equity Opportunities Fund is suited for their investment needs based on their risk profile. Would you like to check your risk profile? Try this

Readers interested in knowing more about SWP and about this fund, should read the following –

Strong SIP performance over last 10 years from Reliance Equity Opportunities makes it a top pick

Mutual Funds are ideal investment option for retirement planning

Mutual Fund systematic withdrawal plans are smart option for income needs