I had invested Rs 3 lakh in the NFO of SBI One India Fund in 2006. The fund was been a dismal performer in 2007 and 2008. I had invested the amount with a long term perspective. Please advice if I should remain invested in this fund or switch to another? If yes, which one?
— Biyani M.L.
SBI One India debuted as a closed end diversified equity fund in December 2006. It invests in a diversified basket of equity stocks focusing on all four regions of India, without any sector or market cap bias.
On the performance front, the fund did not fare well during the downturn and barely managed to beat the category average in 2009. Currently it has a 1-star rating by Value Research. The fund recently got converted (January 2010) into an open ended fund.
We suggest you exit this fund and opt for an open ended fund which has a good track record. You may choose any one of these: HDFC Top 200, DSPBR Equity, Magnum Contra.
In the future, avoid new fund offerings (NFOs) and closed end funds. Mainly because closed end funds accept investments only in lump sums and that too only during the NFO period, a time when the fund has no history. Though past performance doesn’t guarantee future returns, it is an important tool in gauging a fund. Also, by parking money at one go, you miss out on the advantage of systematic investing. Moreover, why block your money in a closed end fund?
This article was originally published on April 20, 2010.
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