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Sectoral Fund Investments

Investments in a thematic or sector fund need to be tracked regularly…

I have been investing in Reliance Diversified Power Sector fund for the last four years through monthly SIPs. The CAGR is about 4 per cent only. Can you please advice on this fund?
- Aseem Joshi

This fund scheme aims to generate consistent returns by investing in equity and equity-related or fixed income securities of power and other companies associated with the power sector. This fund did well in the past after it was launched in April 2004, but has not managed to maintain the performance in recent times. The narrow mandate that it carries works well when the power sector cycle picks up, which has not been the case in the period of your holding. There is a lesson for you from this investment’ sector and thematic funds do well in select periods when the economic cycle is favourable for them. Moreover, when investing in such funds you need to track its performance closely and frequently to gain from the investment. Make sure you track the fund performance frequently not to be in a situation that you find yourself now.

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