I had invested in Reliance Growth Fund at the time of its IPO. I redeemed half of my investments when the NAV had crossed Rs 100, and am still holding the remaining units. Subsequently, the NAV went on to cross Rs 250, and at present it is still over Rs 200. Would this be the right time to book profits partially?
-Mahender Prasad
Reliance Growth has been a top wealth creator and you would have earned unbelievable returns of over 35 per cent per annum over the last 10 years that the fund has been in existence! This gives a clear message to all the equity investors that there is really no substitute of time in the markets. Equity investing is a long-term game and one has to be patient enough to earn meaningful gains.
Coming to your query, don't tie the decision of whether or not to redeem the units with the fund's NAV. Ideally, an investor should consider allocating a higher proportion of his investment to a fund which has done exceedingly well, rather than exiting it.
Do not worry about the NAV. Base your decision of whether to stay invested or not upon your time horizon. If there is no foreseeable need for money, then you can stay invested and let it grow the way it has over the last 10 years. But if you want to consume the money right now or say in a year's time or so, then it will be wise to exit.
This article was originally published on September 02, 2006.
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