I am holding 10,000 units of Sundaram BNP Paribas Energy Opportunities Fund and 6,000 units of Tata Indo Global Infrastructure Fund, both from their NFO launch. Do I need to redeem/switch over these funds?
Both Sundaram BNP Paribas Energy Opportunities (launched in December 2007) and Tata Indo Global Infrastructure (launched in October 2007) are thematic, close-ended funds. The former invests in shares of energy companies, while the latter invests in both Indian and foreign infrastructure companies.
Investments in thematic funds should only corner a small allocation of your portfolio and never be core holdings. Secondly, we do not generally advocate close-ended funds since your money tends to get blocked. Thirdly, we do not suggest investing in new fund offerings (NFO) since we prefer recommending funds that have a track record and performance history.
If you do not need the money, hold on or else you will have to pay a hefty exit load to redeem your units. Also keep in mind that equity investments are not for the short-term, one should invest only if they are intent on remaining invested for 3-5 years, at the least.