NFOs are a risky proposition, even more so if they are of a thematic fund…
18-Apr-2011 •Research Desk
I had invested in the NFO of Reliance Infrastructure and find that the current NAV is below the NFO price. Is it worth to hold on to this fund for some more time?
- MSM Rao
You had invested in the NFO of a thematic fund that invests in the infrastructure space in companies directly and indirectly related to infrastructure. NFOs are risky as they do not have a performance history to look into before investing. Investing in NFOs works if it has a compelling idea to invest in, infrastructure as a theme is old and there are few funds that already exist in this space and faring better. You are right with your observation that the NAV of this fund is currently below the NFO price. While we can empathize with your situation, the way out for you is to exit this fund. You would be better off cutting your losses now and investing in a consistently better performing fund.