Investing only in the oil and gas sector was not a prudent choice

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: Awarding blocks to various oil and gas companies this year would see huge investments in the energy sector in the coming 3-4 years. Abhay Rao of the The Financial Express spoke with Gautami Desai, Fund Manager, UTI Mutual Fund on the performance of the fund and growth prospects in the energy sector. Excerpts:

Why did you change the objectives of your fund?

The primary reason to change our objectives was to broaden our investment base. Earlier we would only buy oil and gas companies. However, now, we cover the entire energy sector as well as peripheral companies that will benefit form this sector. While dealing in only the oil and gas sector, earlier we found the business to have more risks. Also, subsidies and regulations often caused underperformance. These factors reduced our returns to investors and hence we decided to broaden our investments and increase our returns as well as reduce our risks. Electricity and ancillary companies that benefit from the power sector have also been included in our investment plans. Looking at the current economic scenario, being in only the oil and gas sector was not a prudent choice. It's the power sector that will see a lot of growth and is currently showing a lot of potential. This move should also help us bring higher returns to investors.

How much of the fund is currently invested in this sector? Where do you see investment levels reaching in the future?

As of now, our fund is almost fully invested in the power sector and that will remain the primary focus of the fund. The future for the energy and power sector looks very bright and the coming years should yield great dividends. As per the 11th five-year plan, the government hopes to put out 70,000 MWs of power. This would require approximately 10 lakh crore to be invested in the sector. Such figures are very encouraging and getting into this sector seemed like a smart move. While personally I am not sure where investment levels will reach in the future, I would stick with the figures given by the government as of now.

What were the drawbacks you faced in the petro sector earlier that prompted a focus on the energy sector?