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The Fate of Investments in Infrastructure Funds

Infrastructure sector remains full of worries and investors should stay away from it

I invested Rs 27,500 in Reliance Infrastructure Fund in 2009. The fund has not performed well since inception. Current value of my investment is nearly Rs 12,500. I want to recover the invested amount. Should I wait and stay invested or switch to another fund?
-Kishor Shinde

In the past decade, the infrastructure sector was instrumental in riding the bull run up to 2007. Several mutual funds rode on the theme. However, performance of infrastructure funds started dropping after the 2008 crisis.

Reliance Infrastructure was a late entrant among the this sector of funds. Despite that it was lucky with its collection of Rs 2,350 crore at its launch in June 2009. Since then, infrastructure funds have been completely out of favour. With its NAV at Rs 4.33 on August 22, 2013, 63 per cent of the investors have already pulled out of the scheme.

Reliance announced the merger of Reliance Infrastructure fund into Reliance Diversified Power Sector Fund, which will be effective from September 7, 2013.

However, the merger of Infrastructure fund with Diversified Power Sector fund is unlikely bring any cheers to investors. The Power fund has also been in rough weather for few years now and has a narrower investable universe compared to an infrastructure fund.

It will be better for you to exit the fund and invest in a diversified equity fund from large or large and mid cap category.

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