I had invested a lump sum amount of Rs 10,000 each in Birla Sun Life Tax Relief 96 and Kotak Tax Saver in January 2008. The lock-in period will get over now. But the funds are doing badly. If I redeem now, I will be at a loss. How can I recover my losses?
By investing in lump sum at the height of the last bull run, you indeed bought into these funds when they were highly priced. That cannot be undone now, but you should also consider the tax benefits you have enjoyed on these investments. These funds are not bad, and they could still turn around. However, that will be a risk that you will be taking.
The only way you can hope to recover your losses is by investing in funds that earn better and make up for the loss. There are many other opportunities available in the market that you are losing out on by not investing in them and waiting for these investments to get better. It’s a tough call to take and you may consider initiating a systematic withdrawal plan on these funds and invest the proceeds into a large-cap fund such as DSP BlackRock Top 100 equity or IDFC Imperial Equity Plan A. There is a lesson for you from this experience; it is important to be regular, systematic and disciplines with investment through the systematic investment plans (SIP) route when investing in mutual funds.