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Give Investments Time

Equity investments should be made with a time frame of not less than one year in mind…

I had invested in DSPBR Micro Cap Fund in October, 2010 when the NAV was Rs 18. It has now fallen to Rs 14; should I continue investing in the fund or exit?
- Vamsi Krishna

Investors seek a unidirectional performance in funds which is always going up. However, the vagaries of stock markets are such that, however much this is desirable, it is not possible. While your observation is right on DSPBR Micro Cap fund, you should also yourself what time frame you considered before investing in this mid- and small-cap fund? Equity investment is done with a time frame in mind which is definitely not less than a year. You should give time to your investment in this fund. This fund has earned an annualised 10.74 per cent in the past three years, which is much better than the category average. You should continue holding to this fund and track its performance to consider exits only if it continuously loses.

You can consider investing in funds based on the Value Research star rating of funds. This is a good risk-adjusted measure to evaluate a fund and does not change overnight. A fund that continuously underperforms starts to lose the ratings and is an indication to consider exit, which is not the case with this fund as yet.

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