I have units in Reliance Diversified Power Sector Retail; should I hold on to this fund or exit?
You should exit a fund that is losing performance to cut your losses and invest elsewhere
I have units in Reliance Diversified Power Sector Retail; should I hold on to this fund or exit?
Ravi Sarna, Delhi
This fund was launched in May 2004 and the scheme aims to generate consistent returns by investing in equity and equity-related or fixed income securities of power and other companies associated with the power sector. It is a sector-specific fund that invests in securities of power and other companies associated with the power sector. Sector fund tends to be risky and volatile because of the narrow investment mandates that they have. Such funds perform exceedingly well if the sector that they invest in is in a growth cycle and the economy is on the upswing, pushing the sector prospects further. Reliance Diversified Power Sector has a chequered past – it posted 31 per cent returns in the past one year, but over a five year period, the fund has posted 13.5 per cent returns. You have a lesson to learn from this investment; it is important to track the performance of your investments and you should exit a fund that is losing performance to cut your losses and invest elsewhere.