Now if you are encouraged by the way the different sectors of the economy are showing resilience and recouping from the coronavirus-led losses, you could as well play with the infra theme or sector. Further, the best idea to get into will be through a staggered approach as markets currently are close to an all time high and after struggling for quite a long time to reach 16,000 mark, Nifty may soon breach these levels. Also, so as to time the markets correctly may be a difficult exercise for majority of you, you can very well enter the infra sector through the SIP route.
What are infrastructure funds?
These funds or mutual fund schemes typically invest in all those areas that largely make up the infrastructure landscape. As per SEBI mandate, it is crucial for these funds to invest a minimum of 80% of their overall asset pool in a particular sector say for instance infra sector here. Now as these sectors are concentrated around a particular theme or sector, there is high risk involved in the scheme.
Further as infra sector is also an insight to the pace at which the economy is progressing, you as an optimist who is bullish on overall Indian growth story can put your bet on it, though may be in small amount only to stay on a safer side.
1. Quant Infrastructure Direct Plan:
Value Research and Morning Star has accorded this sectoral or thematic fund a 5-Star rating. NAV of the fund as on July30 is 18.331 and the fund in comparison to category average carries a higher expense ratio of 2.15%. Fund size of the mutual fund scheme is Rs. 42.67 crore as of June 30, 2021.
The scheme by Quant Mutual fund came into existence in 2013 and since then has given a return of over 15%. Benchmark of the fund is Nifty Infrastructure TRI. The risk-o-meter defines it to be placed in the high risk category.
Minimum SIP investment in the fund can be made for Rs. 1000. In a 1-year timeframe, the fund has provided outstanding return of 122.95%.
SIP of Rs. 10000 started 3 years ago, accumulating to an investment of Rs. 3.6 lakh is now worth Rs. 7.21 lakh.
Top holdings of the fund include Union Bank, Vedanta, ICICI Bank, Coal India, Bharti Airtel, Tata Steel, India Cements, L&T among others.
The fund is being managed by Ankit A Pande since May 2020.
2. Invesco India Infrastructure Fund - Direct Plan - Growth:
This fund enjoys the highest rating by all 3 major rating agencies i.e. 5 Star rated fund by CRISIL, Value Research as well as Morning Star. The fund's assets under management are at a good Rs. 179 crore and also its expense ratio is slightly above the category average at 1.46%.
In a 1-year time frame, this fund has underperformed the BSE India Infrastructure Index TRI and provided a return of 76.7%. The fund came into being in the year 2013 and since then has offered a return of over 18%.
Exit load applies in the scheme and is as following;
For units in excess of 10% of the investment,1% will be charged for redemption within 365 days
Note SIP in the fund can be started for as less as Rs. 500 and for lump sum investment one needs to shell out Rs. 1000.
Top holdings of the fund are L&T, Indraprastha Gas, Ultratech Cement, Bharat Electronic, KNR Constructions among others.
The fund is being managed by Amit Nigam since September 2020.
Top Rated and Top performing Infrastructure Mutual funds:
|Infrastructure Mutual funds||Annualised SIP 1-year return||SIP 3-year return||SIP 5-year return||Rating|
|Quant Infrastructure Direct Plan||120.21%||50.99%||30.65%||5-Star by Value Research and Morning Star|
|Invesco India Infrastructure Fund - Direct Plan - Growth:|
|88.79%||36.85%||23.43%||5-Star by CRISIL, Value Research and Morning Star|
Points to remember when investing in sectoral funds like infrastructure
This is a wholly equity oriented scheme and that too concentrated around a particular sector and hence highly risky bet. To reduce the risk as well as lessen the impact of volatility one needs to be investing in these funds for a minimum of 5 years time horizon to reap optimal gains. and that is the main reason for their high risk. For an aggressive investor class person even allocation of not over 10% into this asset category is suggested.
Mutual funds are risky and the theme based funds are the riskiest, so do take in professional help. Further all the investments listed out on GoodReturns.in should not be taken as investment advice.