Don't wait for a turnaround

I had invested Rs 40,000 in Sundaram Energy Opportunities when it was launched in 2007-2008. I have not even recovered my investment. Should I get out of this fund?

- Adway Mardikar

You had invested in the new fund offer of a thematic fund, that invests in energy and energy-related companies. Such funds are risky and also do not have a performance history to look into before investing. You did so when the markets were on a rise and many new funds were being launched.

Yes, the fund has fared badly, more so when the markets are today at old highs. Redeem your investments and cut losses now. Use the proceeds to invest in a better performing fund.

I am looking for the best options to invest for my retired parents, which will give them monthly income. This should be better than a fixed deposit and must have capital protection.

-Manish T

If the monthly income from this investment is what your parents will depend on for their expenses in retirement, it will be a good idea if they do not consider mutual funds, as these do not guarantee capital protection.

We suggest the Senior Citizen Savings Scheme for your parents, that offer better returns than fixed deposits. However, this scheme pays out quarterly interest. For monthly income, you should consider the Post Office Monthly Income Scheme.

I have a systematic investment plan (SIP) of Rs 1,000 in Fidelity Tax Advantage Fund. With the Direct Taxes Code (DTC) taking effect from 2012, what will happen to this ELSS investment?

- Senthil Kumar K

Yes, the relevance of tax benefits in ELSS will cease to exist once DTC comes into play. How AMCs will treat existing tax planning funds is yet to be seen. However, you will get the Section 80C benefits in the ELSS you hold currently and also in any of the ELSS investments you make before April 2012.

I want to know if this is the right time to invest in mutual funds in a lump sum or should I invest every month through SIPs?

- Manoj Gawande

There is no right or wrong time to invest, as long as you are aware how long you plan to invest and for what reasons. For instance, if you are clear you are investing for the next five years for wealth creation, you can start any day. However, if you are thinking of investing for three months, mutual funds are not for you.

I want to start saving for retirement. To protect my capital, I am planning to put a lump sum in fixed deposit and invest the interest in good funds. Your thoughts.

- P Ramachandran

It’s not a bad strategy to invest in fixed deposits and invest only the interest in mutual funds. You come across as a sceptic of an investor at the moment and should perhaps start investing in balanced funds. This way, you will gain experience and can scale up later.

I want to invest through SIPs worth Rs 5,000 and I am willing to take a higher risk for the next three to five years. Please suggest some funds.

- Raghu Venkat

A three to five year investment horizon is a good starting point. You can consider investing in IDFC Premier equity, HDFC Top 200 or DSPBR Top 100 funds.

Value Research