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2 Best 5-Star Rated Infrastructure Mutual Funds To Bet In 2022 Post Budget Declaration

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The Union Budget for 2022-23 does not include much for the middle class, but it does place a greater emphasis on the infrastructure sector for the Indian economy. As a result, infrastructure mutual funds can see benefits in terms of returns for investors that stay invested for the long term for more than 5-years. We've chosen two infrastructure mutual funds based on Value Research's 5-star rating, but first, we'll go through why you should invest in these mutual funds.

 

Should You Start SIP?
 

Should You Start SIP?

PM GatiShakti has been given a massive impetus for economic growth and infrastructural development in the Union Budget 2022. Roads, Railways, Airports, Ports, Mass Transportation, Waterways, and Logistics Infrastructure are the seven pillars that support the PM GatiShakti.

In her budget speech, the finance minister had said that "The projects pertaining to these 7 engines in the National Infrastructure Pipeline will be aligned with PM GatiShakti framework. The touchstone of the Master Plan will be world-class modern infrastructure and logistics synergy among different modes of movement - both of people and goods - and location of projects. This will help raise productivity, and accelerate economic growth and development."

She also made an announcement that "PM GatiShakti Master Plan for Expressways will be formulated in 2022-23 to facilitate faster movement of people and goods. The National Highways network will be expanded by 25,000 km in 2022-23. Rs 20,000 crore will be mobilised through innovative ways of financing to complement the public resources."

Considering how much emphasis this budget has placed on infrastructure, investing in infrastructure mutual funds might be a solid choice. According to the Association of Mutual Funds in India (AMFI), this mutual fund category returned 31.30 percent on average in the previous year. Sectoral Funds are committed to investing at least 80% of their assets in stocks of companies engaged in the infrastructure sector, which means they are less diversified and hence riskier.

Since such funds' returns are very erratic owing to a dearth of diversification, you should diversify your portfolio with a little exposure to infrastructure funds and the remainder of your portfolio with large-cap, flexi cap, and debt funds to insulate your returns from volatility.

From an expert point of view Mr Paras Bothra - Chief investment Officer at Ashika India Alpha Fund, has said that "This Union Budget has been a positive one with an emphasis on CAPEX boost, which defines the government's pro-growth stance. The markets are reacting favourably to the budget. If you look at the capital expenditures, that has been raised to 35.4% to fund various infrastructure projects. That bodes well for a balanced and rapid recovery of the economy. The public investment will aid a very resilient India to come out of the pandemic distress. However, the focus on consumption is less emphatic as compared to the capex part of the economy. The fiscal deficit also remains a bit elevated, though it is going to be lower than last year. So, infrastructure, capital goods, manufacturing led companies who have been given investment too, along with the solar production-linked incentive (PLI) scheme, affordable housing amongst others are the areas where the Government has laid major emphasis."

While India is on a road to increasing infrastructure spending as we can witness from the budget reactions, initiating a SIP in these 5-star rated infrastructure funds could be profitable depending on your risk profile.

Invesco India Infrastructure Fund Direct-Growth

Invesco India Infrastructure Fund Direct-Growth

This infrastructure-sector mutual fund has been in operation since 2013 and has a 5-star rating from Value Research. As of December 31, 2021, Invesco India Infrastructure Fund Direct-Growth has Rs 358.95 crores in assets under management (AUM) and a Net Asset Value (NAV) of Rs 32.1800 as of February 2, 2022. The fund's expense ratio is 1.05 percent, which is lower than the expense ratios charged by most other infrastructure funds.

The Construction, Engineering, Energy, Services, and Metals sectors account for the top 5 allocations. Larsen & Toubro Ltd., Tata Power Co. Ltd., Reliance Industries Ltd., Bharti Airtel Ltd., and PNC Infratech Ltd. are the fund's top five holdings. SIP in this fund can be started from Rs 500 and the fund's performance as of November 30, 2021 is shown below.

PeriodFundBSE India Infrastructure IndexNifty 50 TRI
1 Year61.14%65.59%32.19%
3 Years24.23%15.18%17.38%
5 Years17.85%9.80%17.04%
7 Years12.60%7.66%11.58%
10 Years16.18%11.36%14.79%
Since Inception8.34%3.74%9.57%
Source: invescomutualfund.com   
Quant Infrastructure Fund Direct-Growth

Quant Infrastructure Fund Direct-Growth

This is another infrastructure fund introduced by Quant Mutual Fund in September 2007 that has obtained a 5-star rating from Value Research. As of December 31, 2021, Quant Infrastructure Fund Direct-Growth has Rs 292.29 crores in assets under management (AUM) and a Net Asset Value (NAV) of Rs 22.10 as of February 2, 2022. SIPs in this fund can be started with a minimum amount of Rs 1000.

The fund has a 0.58 percent cost ratio, which is lower than most other funds in the same category. The top 5 sector allocation of the fund are Construction, Services, Financial, Metals, and Communication. Adani Enterprises Ltd., Larsen & Toubro Ltd., Vedanta Ltd., ITC Ltd., Adani Ports and Special Economic Zone Ltd. are the fund's top five holdings. The fund's performance or annualised returns can be viewed in the table below.

1 Month6 Month1 Year3 Year5 YearSince inception
5.24%23.64%84.89%41.03%26.60%17.66%
Source: Groww     
Disclaimer

Disclaimer

The views and investment tips expressed by authors or employees of Greynium Information Technologies, should not be construed as investment advice to buy or sell stocks, gold, currency, or other commodities. Investors should certainly not take any trading and investment decision based only on information discussed on GoodReturns.in We are not a qualified financial advisor and any information herein is not investment advice. It is informational in nature. All readers and investors should note that neither Greynium nor the author of the articles, would be responsible for any decision taken based on these articles. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates, and authors do not accept culpability for losses and/or damages arising based on information in GoodReturns.in

Read more about: mf mutual funds sip
Story first published: Thursday, February 3, 2022, 17:14 [IST]
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