I invested Rs 15,000 in an infrastructure fund in early 2009 through the systematic investment plan (SIP). It gave me a negative 10 per cent return in one year. Some brokers advised withdrawing or at least lowering exposure. But I thought it to be profitable, with long-term growth prospects. Please advise.
If India has to grow at a GDP of eight per cent plus, we cannot do with the current state of infrastructure. Hence, the government is obliged to focus on it. With the rising interest rates hopefully peaking out and the government keen on resolving the problems before the sector, the long-term prospects seem promising. Your conviction is well-placed and, hence, it would be worthwhile to hold onto your investment.
My son is six years old and I want to start investing for his education. There are many mutual funds specifically for this. Are these good options? Or, is a unit-linked children's plan preferable? What do you suggest?
One can consider a unit-linked option to enjoy dual benefits: Of returns from investment and an insurance coverage. However, since this has a lock-in period (up to the maturity of the policy), consider only if the investment horizon is long (10 to 15 years), and there is no immediate need for funds i.e. you don't need these in say five years.
I, 24, have been investing Rs 7,500 via SIP in a few equity-diversified funds over the past six months. Also, I want to start investing in direct equities. My friend, who has been trading stocks, suggested I buy stocks which have seen earnings per share increase or are trading at a 52-week low. Is this the correct way of identifying stocks? If not, how else can I pick these?
Your strategy to gain exposure to equities through the mutual fund route using SIP is sound. Investing in equities is a full-time job and needs adept professionals. Investors, who do not have the requisite experience, expose themselves to the vagaries of the market. However, if you still desire, please analyse the quality of the management, the business and the annual accounts. Also, the last five-year growth trajectory, the management outlook for the business and the valuation are equally important before investing.
The writer is managing director and principal portfolio manager, Capital Portfolio Advisors. The views expressed are his own. Send your queries to yourmoney@bsmail.in
