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Exit SBI Infra Fund

There are better funds available in the market under the same category

Should I remain or exit from SBI Infrastructure?
- Aditya Singh

We understand your disappointment with SBI Infrastructure Fund Series 1. In case you have not realised, it is a closed-end fund with a 3-year tenure. During this period, investors can exit but fresh investors cannot enter. Due to its initial issue expense (which the fund house amortises over the fund's tenure), the fund lagged behind both equity funds and infrastructure funds. Infrastructure as a theme has under-performed the broad equity categories in both 2008 and 2009. The funds were hit hard in the market meltdown of 2008 and were unable to perform well in recent times. One of its key sectors - Energy - has underperformed in recent times while non-infrastructure sectors like IT and Auto have outperformed the market. Moreover, due to its theme it maintains a high exposure to large cap stocks which underperformed mid and small caps in 2009.

If you sell now, the exit load is nil, but you will have to bear the proportionate unamortised initial issue expenses for exiting during the closed 3-year tenure of the scheme. Since it is going to turn open ended from July 5, 2010, hang on to the fund till then. Once open ended, you can sell your units. We recommend four funds: Canara Robeco Infrastructure, ICICI Prudential Infrastructure, Tata Infrastructure and UTI Infrastructure. If you take a look at the Category Watch section of our magazine, you will find detailed analysis of these four funds.

Schemes   YTD*  2009  2008
SBI Infrastructure Fund Series 1 -1.83 75.3 -60.83
Equity Diversified Funds (Avg) 5.22 84.4 -55.51
Infrastructure Funds (Avg) 2.78 79.25 -58.21
*Returns as on June 30, 2010

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