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Shackling the Manager

An investor uses only half the fund manager’s strength when he opts for a sector fund

I had invested in Reliance Power a year back at Rs 58. Now, it is around Rs 70. Is there a possibility of the price rising further? I had also invested in SBI Magnum Contra and Reliance Natural Resources at that time.

Reliance Power is a sectoral fund and all three are open-end funds. While it says it is a diversified power fund, but RPower invests in only power sector companies. Magnum Contra is a very good diversified fund and Reliance Natural Resources is a thematic fund, which invests in companies involved in natural resources, mining etc.

If you want to invest a huge amount, then Magnum Contra is the fund to go for, or even Reliance Growth. One should always opt for those funds that can invest in any sector. Because when the power sector is out of favour, then also RPower has to invest in power companies as it is in its mandate.

An investor always thinks of entrusting his money to a fund manager and gives all the freedom to him to invest on his behalf. But when you are investing in a power sector fund, or a thematic fund, then the fund manager does not have total freedom and you are utilizing only half of his strength. You are not taking full work from the manager such as letting him invest in whichever sector, or sectors, that is doing good at that particular time, or even to take out the money. That is why, if you are not in need of the money already invested, you should move the maximum amount into any diversified equity fund.

I am undertaking an online trading technical analysis training. There is chart that comes online, but it is very costly, while it is free on Google. How good is it to make money?

Prices are flashed live on google.com as well as yahoo.com, at one minute’s delay. But if you are taking this training just to make a lot of money in a very short time, then it is very dangerous. It is not advisable to try and generate gains just by looking at charts.

Everything goes well till the markets are doing fine. But once it starts falling, you can succumb easily to heavy losses. You should be aware about it.

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