GDP growth in India and other emerging economies

“The current rate of GDP growth in India and other emerging economies is likely to spur significant demand for natural resources and energy.” That, definitely, marks the sector as one of the most sought after sectors in time to come.

On the other hand, with large amount of capital being infused into the natural resource sector, it is undoubtedly in the midst of a super cycle and investors can certainly cash in on the benefits by investing in such funds. Natural resources funds will also help reduce portfolio volatility and provide a hedge against the ever rising inflation. Further; as industrialisation and urbanisation increase the intensity of consumption of natural resources, the demand for natural resource will fast outpace the supply and thus in the foreseeable future the prices of natural resources can only go up.

Though Reliance Natural Resources fund has not shown great returns so far, the above mentioned factors combined together make the theme of natural resources and energy funds a sustainable investment in the long term. An investment today in any such fund is bound to give better results in the future and the early investors will have the last laugh for sure.

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Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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