Review: DSP Black Rock World Energy Fund

Recently, DSP Black Rock has launched World Energy Fund. The NFO (New Fund Offer) will close on 31st July 2009.

Investment Objective -

The demand for oil is growing steadily from emerging and developing economies while oil field discoveries continue to decline. Therefore the gap between demand and supply will increase with time. Also, the need for alternative sources of energy is rising as the world is being forced to address the concern for the environment due to global warming issues.

DSP BlackRock World Energy Fund is a feeder fund into the BlackRock Global Funds (BGF) – World Energy Fund which invests in oil & energy companies globally. These companies generally operate across various geographies and enjoy considerable pricing flexibility. The scheme can also invest up to 30% in the BGF – New Energy Fund, which invests in equity securities of alternative energy companies, engaged in alternative energy and energy technologies including renewable energy and alternative fuels.

Invest or Not Invest? -

The Objective of the fund is good. But Investor should be aware of the fact that, It is a Sector/Thematic Fund which only invest in Energy Sector. While your Diversified Mutual Fund Manager can anytime invest or move your money in this sector.

So this Fund is bound by its own definition. If somehow Energy sector of the world suffers than the fund manager of this fund can’t move your fund from this sector because it is bound by its own definition. So this Fund can not be a core fund of anyone’s portfolio.

However, if you are very much optimistic about Energy sector and want to increase the Energy Sector concentration in your portfolio than this Fund is a Best Bet.

But Remember, the core 2-3 Funds of your Portfolio MUST be Equity Diversified (Vanilla) Funds only and not the Sector or thematic funds.

Another thing is that, its a NFO so we don’t have any past record of its performance so at this point we can’t predict that this fund will perform well in the future or not. And the Best advise for MF Investor is “Stay Away from NFOs”.

So Let this fund first prove its performance for 3-5 years and than in the future, you can invest anytime in this fund if it shows good performance.