About 3-4 years back, I had invested in different infrastructure mutual funds, but almost all of them are still showing negative returns. Do you think I should hold onto my investments for a few more years? I can hold them for another 3-5 years if required.
-RK Shah
Infrastructure has been extremely disappointing over the past 3-4 years. Most investors invested in infrastructure funds when they were showing high gains. But now, we have seen that the underlying companies of this sector are facing multiple problems. Their profitability and scale of business has been hit. We are still apprehensive about when these companies will show the same kind of growth as witnessed from 2005 to 2007. Is it worthwhile to wait? We are not sure. It might take a couple of years for these companies to turnaround, or it can take longer.
Our suggestion would be that you move your money from infrastructure funds to generic, diversified equity funds, because such funds can always leverage on the opportunities in the infrastructure sector as and when they arise. We believe that infrastructure is very loosely defined; everything except for technology, pharma and consumer goods can be defined as infrastructure. So you're not getting a fine classification, and the theme hasn’t worked.
This article was originally published on April 09, 2012.
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