VR Logo

Thematic Fund?

I have invested in three different funds & am thinking of redeeming them to invest in a thematic fund. I am also looking to make changes in my equity holdings. Please advise.-Varkey Chacko

I have invested in DSPML Opportunities (Rs 24,000), Magnum Contra (Rs 68,000) and Franklin India Prima Fund (Rs 64,000). I am thinking of redeeming them and investing the proceeds in JM Basic because of the fund's great returns. On the equity side, I am planning to sell Hotel Leela (Rs 9,000) and Maruti Udyog (Rs 30,000) and invest the proceeds in Infosys and RIL.
-Varkey Chacko

Over the one-year period ended August 13, 2007, JM Basic had posted a return of 75 per cent. But you need to realise that it cannot be compared with the likes of DSPML Opportunities or Magnum Contra. Since JM Basic is a thematic fund, it has a restrictive mandate to invest in. So it will look at energy, power generation and distribution, oil and gas, petrochemicals, electrical equipment suppliers, metals, construction material and construction. But banking, pharmaceuticals or technology will never find a place here.

As a result the fund undertakes concentrated sector bets. The top three sectors account for as much as 65 per cent of the fund's holdings (as on July 31, 2007). As long as these sectors do well, the fund will perform well.

As to your equity holdings, all decisions should be made taking full cognizance of your mutual fund holdings. DSPML Opportunities has 6.42 per cent and 2.35 per cent of its portfolio in RIL and Infosys respectively. Magnum Contra has invested 5.19 per cent (RIL) and 2.4 per cent (Infosys) in these stocks.

Further, your reasons for switching investments are unclear. While the automobile sector as a whole has seen a bit of a slump, this maybe a temporary phenomenon. In the long term, there does not exist any explicit negatives for either Hotel Leelaventures or Maruti Udyog. Both companies belong to sectors with an optimistic outlook.


Post Your Query