What are infrastructure mutual funds?: Infrastructure funds are sector funds that invest in firms that are directly or indirectly involved in India’s infrastructure development. Infrastructure companies include those active in industries such as energy, power, metals, real estate, and so on.
Despite the fact that infrastructure company shares plummeted during the 2008 financial crisis, they began to perform strongly in 2014.
Investors who want to invest in this fund should look at the scheme’s performance over the previous five years as well as their AUM (that should be more than 100 Cr). Also, keep in mind that these are sector-specific funds, which carry a high level of risk. As a result, only an individual with an extensive understanding of this area and expertise in equities investing should participate in this fund.
Infrastructure funds primarily invest in the equities of firms involved in the electricity, building, capital goods, and metals sectors.
List Of Five Infrastructure Mutual funds
Infrastructure stocks have been important winners and players in the huge market surge that began in March 2020. Naturally, mutual funds that invest solely in such stocks have outperformed the market. According to Value research statistics, the top five schemes have quadrupled investors’ money in the previous year. Infrastructure funds primarily invest in the equities of firms involved in the electricity, building, capital goods, and metals sectors.
These funds are dangerous and must be entered and exited at the right time. Furthermore, even their direct plans have significant expenditure ratios. Because this is a wide subject, many of the companies in the aforementioned divisions are of the midcap sort. All expenditure ratios and returns indicated are for these schemes’ direct plans.
1. Quant Infrastructure fund
In the last year, the Quant Infrastructure Fund has returned more than 118 percent. It is the category’s best-seller. The scheme has a capital of only Rs 85 crore and charges a 2.15 percent expense ratio for its direct plan. Its top holdings are mostly well-known large-cap firms, although it also invests in midcaps.
2. ICICI Prudential Infrastructure fund
The next fund on the list is the ICICI Prudential Infrastructure Fund, which has returned 108.6 percent in the last year. With Rs 1,680 crore in assets, it is the biggest program in the category. Its direct plan has an expense ratio of 1.74 percent. Power, energy, construction, and financial stocks all play a significant role in the fund’s portfolio.
Approximately 61 percent of the fund’s assets are invested in large-cap equities, with the remainder in mid and small-cap companies.
3. IDFC Infrastructure fund
Over the last year, investors in the IDFC Infrastructure fund would have made 104.8 percent more money. The fund has significant holdings in firms involved in construction, cement, electricity, and energy. It is in charge of assets worth Rs 650 crore. At 1.25 percent, the expense ratio is relatively modest. Mid and small-cap companies dominate the portfolio, accounting for approximately two-thirds of the holdings.
4. HSBC Infrastructure Equity fund
Over the last year, the HSBC Infrastructure Equity fund has returned approximately 102 percent. With assets of Rs 112 crore, it is a relatively tiny fund. The cost-to-income ratio is 1.18 percent.
5. Aditya Birla Sun Life Infrastructure fund
Birla, Aditya Sun Life Infrastructure fund earned gains of 97.4 percent over the past year, falling just shy of doubling investors’ money. It is in charge of assets worth Rs 570 crore. The cost-to-income ratio is 1.82 percent. The portfolio includes equities in the construction, engineering, energy, and metals industries. The fund’s assets are heavily skewed toward mid and small-cap stocks.
These funds are not recommended by us. Infrastructure funds, like other theme funds, are volatile and cyclical in nature. There may be moments of rapid rallying that coincide with economic recovery and beneficial government initiatives.
However, there may be protracted periods of underperformance. The timing of entry and leave becomes critical in order to maximize the category’s potential, however, this is easier said than done. Only after your portfolio has been well-diversified and all conventional categories have been exhausted can you consider sector/thematic funds. In such scams, you should only invest a little amount of money, if at all.
Choose excellent diversified debt and equity schemes with the aid of an advisor or by following our MC30 list. To stay updated on Mutual Fund Investments, do stay tuned to Tech For U.