Reliance MF shuts open-ended scheme

The AMC says it’s taking such a decision as increasing the fund’s size further may prove detrimental to the existing unit-holders. But, the AMC has indicated that the closure is not forever. The withdrawal will be effective for three months and the AMC may extend or reduce it.

The proposed withdrawal of sale of units comes into effect on fulfillment of one of the following conditions — when the corpus becomes Rs 1,700 crore or August 14, 2005, whichever comes earlier.

Globally, it has been noticed that hot performing funds lose their magic once they grow bigger. To avert such a situation, many funds in the US (especially hedge funds) don’t accept money from new investors. In the last two years, Reliance Growth has registered a phenomenal growth in its assets — from Rs 38.71 crore in June 2003, the fund’s corpus has swelled to Rs 1,322 crore on June 30, 2005.

However, overseas funds usually continue to accept investments from current subscribers. This ensures a growth in their asset base, but at a moderate pace. In case of Reliance Growth Fund, no new application would be entertained.