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Course Correction

An investment in JM Basic dropped hugely in value. What should be done?

My investment of Rs 50,000 in JM Basic Fund has dropped to Rs 18,000 in value. Should I remain invested, or book a loss and exit?

JM Basic is an aggressive fund. From being the best-performing fund in 2007 with a 111.44 per cent gain, the fund has become the third-worst performer in 2008, falling 75.71 per cent. Despite the market rally, it is still down about 60 per cent from its peak. However, this year, its returns of 72.05 per cent have put it among the top 10 funds. But a complete recovery is still 140 per cent away. It is in the nature of this fund to be volatile, so stay invested only if you wish to take this kind of risk. If it is any consolation, the fund manager who initially constructed the portfolio for the fund is not managing it now.

If you are looking for alternatives among large-cap equity funds that are more stable, you can choose from funds that have a long-term record of good risk-adjusted returns. Among them are DWS Alpha Equity, HDFC Top 200, DSPBR Top 100, Franklin India Prima Plus, Magnum Contra, and Sundaram Select Focus.

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