Every time technology stocks witness a surge, investors get all excited expecting another bull run that will help them make some money on their tech stocks/IT funds that were bought in 1999.
Over the last 2-3 years ever since we have seen the tech boom in 1999, investor expectations have got aligned with the sentiment in and performance of technology stocks. When there is any significant (upward) movement in technology stocks, investors have two questions uppermost in their minds one is whether they should be entering the sector to benefit from the increased activity in technology stocks and the second question is raised by the hordes of investors who had entered the sector at 1999 levels and are perennially optimistic for a tech revival to match that of 1999-2000. (Would you like to keep track of tech funds? To get free email alerts of daily NAVs/dividends/bonus updates, please click here.
Will the tech sizzle last?
| IT Funds |
NAV (Rs) |
1-Mth |
6-Mth |
1-Yr |
3-Yr |
Incep. |
| BIRLA IT G |
12.4 |
8.4% |
3.7% |
21.1% |
-16.9% |
3.7% |
| K TECH |
3.3 |
7.4% |
14.0% |
18.7% |
NA |
-28.3% |
| DSP ML TECH.COM G |
4.7 |
8.5% |
-1.7% |
12.9% |
NA |
-20.7% |
| PRU ICICI TECH G |
3.3 |
11.5% |
5.8% |
9.2% |
NA |
-33.0% |
| CHOLA FREE.TECH C |
9.0 |
4.6% |
2.2% |
5.1% |
-15.7% |
-2.4% |
| FRANKLIN I INFOTECH G |
14.5 |
7.1% |
14.7% |
2.5% |
-19.2% |
29.0% |
| UTI SEC- SOFTWARE |
8.0 |
9.9% |
4.9% |
2.1% |
-19.0% |
-8.4% |
| FRANKLIN INTERNET OPP G |
4.9 |
8.9% |
6.3% |
0.6% |
NA |
-22.0% |
| IL&FS ECOM G |
2.9 |
8.9% |
0.7% |
-0.3% |
NA |
-42.4% |
| ALLIANCE NEW MIL D |
4.1 |
9.0% |
-6.1% |
-0.7% |
NA |
-37.3% |
| MAGNUM IT |
5.9 |
6.5% |
0.3% |
-0.8% |
-31.7% |
-2.3% |
(NAVs as on December 17, 2002. Growth over 1-Yr is annualized)
To be sure, tech funds are a high risk, high return investment. If your risk appetite and age/investment profile are commensurate with the investment proposition that a tech fund offers, then you may want to consider investing in it. To see whether tech funds make good investment sense for a person of your age and risk profile, take a look at Personalfn's Asset Allocation Guide.
What investors need to understand really very well where a high risk/return opportunity like a tech fund is concerned, is that its not meant for everyone. Just because an investment looks exciting and promises boundless growth, there is no reason to jump at the opportunity no matter what your neighbourhood agent promises or offers you. That is the mistake a lot of investor made in 1999-2000, when people in their 50s and 60s were lining up for tech fund IPOs. When you are that old you don't the need the excitement (which in any case is few and far between and is often overshadowed by anxiety) of a tech fund, you need the serenity of an 8% RBI Relief Bond or a fixed deposit.
Before assessing an investment opportunity first evaluate whether the investment is going to help you achieve your financial objective, how long you will need to remain invested in it to achieve that objective (for instance an equity fund may need to be considered for an investment horizon of 3-5 years) and what is the level of risk you will be taking to clock that return. If the risk-return barter is favourable, only then must you consider investing.
PersonalFN provides research recommendations to its premium research subscribers and financial planning clients. To know the recommendation on this investment, become a subscriber or client today. Click here to know about our research services. or Click here to know about our financial planning services. Or, simply write to info@personalfn.com. You can also call us at +91 22 6136 1200.
Add Comments