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Patience Pays

Investors holding the closed-end Morgan Stanley Growth Fund since its inception ought to be a little more patient. Keep an exit target and your investment goals in mind before taking a decision.

I am a housewife owning 2,000 units of Morgan Stanley Growth Fund since February '94. What is the future of my investment in this fund? So far I have received three dividends from it. Should I sell it now or hold it till maturity? And finally where I can get information about its NAV?
Manisha Mukherjee


Three cheers for your commitment to a close-end fund, which isn't a fad anymore. On a more serious note, Morgan Stanley Growth still stands a chance to be a part of any growth portfolio. After all, equities have been the best way to beat inflation. Patience is a prerequisite, as the fund is seven years away from its maturity.

But before you sell in haste and then repent, why not review your financial goals once again? Do you plan to put the redemption proceeds to some use or it is just the anxiety, which has provoked you to think of exiting. Or if regular inflows are what you are looking for, perhaps an equity fund is a wrong place.

Well, if it is the former, then perhaps you will have to make a compromise on returns. Being closed-end, Morgan Stanley cannot be bought and sold at its actual worth (i.e., NAV). It is trading on the National Stock Exchange at Rs 8.40, a 24 per cent discount to its current NAV. So presuming that you bought the units around the face value of Rs 10, selling it at Rs 8.40 now fwont make it a great investment. More so, as stock markets are reaching lower troughs every other day.

On the other hand, we aren't in a position to pen down an exact number as to the returns you will obtain, if you hold on till maturity. But yes, the fund, with strong names in its kitty, is well poised to benefit in a rising market.

Rebuilding its portfolio around growth themes in 1998, its performance has kept pace with other open-end equity funds. It has also managed to outperform its benchmark-the BSE Sensex. The point we are trying to make is, barring its pricing, Morgan Stanley looks like any other equity fund.

At the same time we aren't saying that you "should" stick on till 2009, when the fund comes for redemption. Keep an exit target in mind as to how much return you aim to get. And then keep track of its market price too. As and when the market price reaches a level, which meets your return expectations, you can say goodbye. The most convenient way to track the NAV of the fund is the Fund Snapshot page on valueresearchonline.com. And you can find the market price, an regular intervals, in all the financial newspapers. At the end of the day any decision related to selling or keeping the fund should depend solely on your requirements.

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