Should you exit infra funds?

I invested in UTI Infrastructure after liquidating my UTI Master shares. I am disappointed with the returns. Should I switch to some other fund?

-Kanika Whig

There are two aspects to this issue. One being the thematic nature of the investment, the other is the fund per se. Infrastructure, as a theme, has not been doing too well since past three years. Even the year-to-date (August 17) returns put the category of infrastructure funds at 6.02 per cent as against 10.34 per cent of the equity diversified category.

But one cannot have a myopic view when investing in such a theme. Investors must be willing to ride the highs and lows when investing in such a thematic offering. During the previous bull run (June 15, 2006-January 8, 2008), this category delivered 89 per cent as against 69 per cent from the equity diversified category.

Within the infrastructure category, UTI Infrastructure stands out simply because the fund manager sticks to the theme in a very narrow sense of the word, as compared to other funds which are more broad-based in their definitions. More, he also sticks to a predominantly large-cap exposure, while it has been mid- and small-caps that have rallied in recent times.

If you still believe the infrastructure theme has some steam left in it and the fortunes of the sector could turn around, hold on.

I have an SIP of Rs 2,000 each month with Reliance Growth. Now I want to invest Rs 6,000 monthly. Suggest schemes only from these fund houses: Birla Sun Life Mutual Fund, SBI Mutual Fund, UTI Mutual Fund and Reliance Mutual Fund. How much should I expect from an SIP of Rs 6,000 a month, around 15 years from now?

-Sushil Gupta

If you invest Rs 6,000 per month over a period of 15 years, you could end up with Rs 30,27,456, assuming an annual return of 12 per cent. However, with any market related investment, you cannot guarantee returns.

You have limited our selection since you are focused only on four fund houses. We would not like to recommend any large-cap fund from these asset management companies. Neither would we like to suggest a mid-cap fund, as your portfolio could then get tilted towards smaller companies. You can look at three funds among Birla Frontline Equity, UTI Opportunities, Magnum Contra, Reliance Regular Savings Equity and UTI Dividend Yield. Do an SIP of Rs 2,000 in each fund.

I am investing in Reliance Growth, Reliance Regular Savings, Sundaram BNP Paribas Select Focus, DSPBR Top 100 Equity, SBI Magnum Tax Gain, Sundaram BNP Paribas Tax Saver and HDFC Top 200 through monthly SIPs of Rs 1,000 each over the past two years. Should I continue? I want to invest Rs 4,000 more every month. Should I increase the number of funds?

-Gita Goyal

You're investing Rs 7,000 every month and would like to increase this to Rs 11,000. We don't think you should increase the number of funds; your portfolio is sufficiently diversified.

Discontinue your SIP in Sundaram BNP Paribas Select Focus and replace it with IDFC Imperial Equity Plan A. You do not need a multi-cap fund, since you have sufficient exposure to all market caps. Discontinue your SIP in Reliance Regular Savings Equity.