By Tensing Rodrigues
I had invested in Reliance Infrastructure Fund and Kotak Indo World Infrastructure Fund through NFO. As of today both the funds are not doing well and are not growing.

I would like to know if I should continue holding the same or should sell off both at loss and invest in some other fund. Secondly, would like to know about Post Saving Schemes and if I should invest in such schemes. Thirdly, I would like to make a provision for tax rebate for the year and intend investing in PPF, Life Insurance and ELSS.  Please advise what percentage I should invest in above schemes.
— Gaurish Kamat
If you have given sufficient time to an investment to show its performance, you should not feel bad about exiting it, even at a loss. Moreover if you feel that its fundamentals are weak.
Reliance Infrastructure Fund was launched in June 2009, and has yielded about 13 per cent over the last one year. Its NAV as on September 15, 2010 is ` 12.15; that is, it has gained about 20 per cent over the last year and quarter. Given the performance of other infrastructure funds, this is a bit on a lower side; but then the fund is relatively new.
Kotak Indo World Infrastructure Fund was launched in December 2007, and has yielded about 19 per cent over the last one year. But its NAV as on September 14, 2010 is just ` 7.99; that is, it has lost about 20 per cent over the last two years and half. Given the performance of other infrastructure funds, this is not justifiable; perhaps where it lost out is by investing in foreign funds. But now it has reduced its exposure to overseas securities, and that seems to have helped it to clock a decent performance over last one year.
If you are looking for a fixed return, assured by the government, PO schemes are just right. They yield about 8 per cent on an average. Of your total investment in fixed income securities, about 40 per cent you can hold in these schemes. Of these, perhaps the best is PPF.
Please do not include life insurance under tax saving investments. Life insurance is not an investment. As the very name says, it is insurance. The purpose of life insurance is to provide financial security to your dependents in case of your sad demise. If it saves some tax that only makes your task of providing security a little less costly.
You can use ELSS and PPF for tax saving. I would suggest you exhaust your PPF limit and invest the rest in ELSS.
The revised Direct Tax Code has just been provisionally approved by the Union cabinet. As per the approved DTC, I would like to know how the tax saving mutual fund schemes will be treated. Will the investment in ELSS schemes be eligible for exemption from income tax? What is a “Fund of fund?
—Mahesh Naik
The DTC Bill approved by the cabinet does not provide tax rebate for ELSS investments. We will have to wait and see if ELSS is included in the list before the Bill turns into an act and is implemented, tentatively from April 2012.
A fund of funds is an MF scheme that invests in other MF schemes. Normally avoid these; really they do not make sense in current Indian context.