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Power Sector Fund’s Future

Expectation from a theme fund

I have invested in Reliance Diversified Power Sector Retail Fund–Growth option via SIP mode. The SIPs were from March 2008 to March 2009, which have helped me average the sudden fall in NAV during the market slump in October-November 2008. Should I continue to invest for six more months to further average my investments in this fund. I am looking at investment in this fund for about five years. Being a sector specific fund, can I expect returns of 15 per cent over a five year period? 
-    Nitin Wali

Reliance Diversified Power Sector Retail Fund is a thematic fund that invests in companies of power and related sectors. The fund has put up an impressive show. Riding on its theme, it has delivered huge returns during the rising market and has also been able to contain its losses to an average level. It has delivered an annualised return of 43.29 per cent over the past five years ending May 26, 2009 and is the best performing open-end equity fund over this period. However, being a sector specific fund its future performance will very well depend on the performance of the power sector. Also, your further investment in the fund will depend on the weightage of the fund in your current portfolio. If this is the only fund in your portfolio then you should opt for a normal equity diversified fund as one can have small exposure to theme-based funds but they should never be the core holding of one’s portfolio.

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