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5 Best Performing Infrastructure Theme Mutual Funds 2024

  


Introduction

The focus India has recently placed on expanding infrastructure development is a noteworthy development with important ramifications. The 2024 Interim Budget, which allocated a record-breaking ₹11.11 lakh crore (3.4% of GDP) to infrastructure development, demonstrated the significant emphasis on this area. Several significant announcements were made in a variety of industries. Furthermore, it is projected that India's economic strategy will be strengthened by the relationship between the country's infrastructure development and the ease of international investment through Bilateral Investment Treaties (BITs).

 

Emphasizing funds with an infrastructure theme

With India placing an increasing emphasis on infrastructure development, it is important to keep an eye out for more foreign involvement in the construction, logistics, and transportation sectors. There are dangers involved when investing in individual stocks. Consequently, investing in infrastructure-focused mutual funds can be a wise move for long-term wealth accumulation.

Infrastructure includes mutual funds that invest in transportation networks, communication networks, and utilities including gas, electricity, and water. This increases the range of investments when selecting the appropriate funds, strengthening a portfolio.

 

The following are a few of the top infrastructure mutual funds that could eventually enable you to increase your wealth:

1.Canara Robeco Infrastructure Fund

Offered by Canara Robeco Mutual Fund, the Canara Robeco Infrastructure Fund focuses on investments in businesses that are actively involved in and profit from India's increasing infrastructure landscape. This fund, which was launched in December 2005, has a "Very High" riskometer rating and follows the "Growth" approach. When compared to certain other infrastructure funds, the fund has a relatively smaller portfolio turnover, which could indicate that it places more of an emphasis on long-term investment methods.

The fund's lack of consistent outperformance over its benchmark (S&P BSE India Infrastructure TRI) over a range of timeframes is an alluring feature of investing in it. As with other infrastructure products, there is a high risk associated with this investment because of the sector's inherent volatility. However, in contrast to some of its counterparts, the fund oversees lower assets under management (AUM), which may have an impact on its capacity for bargaining and diversification.

 

 

2.Bandhan Infrastructure Fund

The Bandhan Infrastructure Fund, offered by Bandhan Mutual Fund, is mostly invested in businesses that are both actively involved in and profiting from India's growing infrastructure industry. The fund, which was established in December 1999, has a stellar track record and caters to investors seeking exposure to infrastructure as a means of long-term capital growth.

An interesting choice for investors wishing to participate in India's growing infrastructure market is the Bandhan Infrastructure Fund. The scheme's goal is long-term capital growth through investments in businesses that support and actively participate in India's infrastructure development. For its investments, it primarily concentrates on stock and equity-related products.

An analysis of the fund's portfolio composition reveals that it places a strong focus on infrastructure-related industries, including real estate, construction, power, transportation, and others. The fund may also distribute investments to businesses that are not directly related to infrastructure, such as those who are engaged in the provision of supplies or machinery.

 

3.Quant Infrastructure Fund

Another appealing choice for investors wishing to get into India's rapidly expanding infrastructure market is the Quant Infrastructure Fund. Its goal is to provide long-term growth prospects and capital appreciation through investments in a portfolio of companies focused on the Indian infrastructure market. With an emphasis on sectors like real estate, construction, power, transportation, and other infrastructure-related industries, the fund's portfolio composition closely reflects that of other funds in the same industry. Furthermore, investments are placed in businesses that provide supplies of equipment or materials.

 

4.UTI Infrastructure Fund

A respectable mutual fund offered by UTI Mutual Fund, the UTI Infrastructure Fund is made up of investments in infrastructure-related businesses in India with the goal of generating long-term capital growth. Since its introduction in November 2002, the fund has generated large AUM and has demonstrated impressive performance.

With more than 20 years of experience in the infrastructure industry, the fund has a long history and has proven to be skilled in navigating a variety of market cycles. Investing in this fund is intended to generate capital appreciation through the primary allocation of funds to equities and equity-related instruments of Indian companies that are either directly or indirectly involved in infrastructure-related activities. The fund follows a sectoral theme and offers focused exposure to the infrastructure industry, which is expected to gain from India's ongoing development.

 

5.ICICI Prudential Infrastructure Fund

The goal of the ICICI Prudential Infrastructure Fund, offered by ICICI Prudential Mutual Fund, is to generate capital appreciation by making investments in businesses that are part of and benefit from India's growing infrastructure market. It was first offered in July 2005 and has a significant AUM with a risk rating of "High."

The primary objective of the investment is to pursue capital appreciation through the purchase of stock and equity-related securities of businesses engaged in infrastructure-related activities or expected to gain from them. The fund takes pride in its diverse portfolio, which includes investments in a number of infrastructure-related industries, including real estate, construction, power, and transportation, giving it significant exposure. The direct plan's significant AUM demonstrates the trust and potential negotiating power of investors. However, given that it has a higher portfolio turnover than other infrastructure funds.

 

6.SBI Infrastructure Fund

The SBI Infrastructure Fund, offered by SBI Mutual Fund, invests in businesses that are actively involved in and profiting from India's growing infrastructure sector in an effort to generate long-term capital appreciation. This fund, which was established in July 1996, focuses on investing in stock and equity-related instruments of businesses that are either directly or indirectly engaged in infrastructure-related activities in the Indian economy.

 

 

 

 

Advantages of Investing in Infrastructure Mutual Funds?

The benefits of investing in infrastructure funds are as follows:

1.Positivity

India is spending a lot of money on infrastructure development. Long-term returns in the infrastructure sector have the potential to be very substantial. The industry appears to be promising with a lot of development initiatives underway. Infrastructure funds are seeing strong inflows and yielding strong returns as a result.

 

2.Long-Term Gain on Capital

Infrastructure funds find businesses with the potential for long-term growth. Infrastructure funds make investments in financially sound businesses. Given that infrastructure funds are pure equity schemes, substantial returns can only be obtained by investing over an extended period of time.


3.The act of diversification

Mutual funds dedicated to infrastructure development and management make investments in these businesses. Moreover, they also make investments in other closely linked subsectors like steel, cement, power, and infrastructure technologies. As a result, these funds allow for good diversification.

 

4.Expertise in Management:

It can be challenging to choose companies and make investments in them if you want to invest in the infrastructure sector. Mutual funds in the infrastructure sector make an excellent substitute. You can take advantage of the fund manager's experience and invest in the fund because they are primarily concerned with choosing infrastructure stocks.

 

Who should invest in Infrastructure Mutual Fund?

If exposure to the infrastructure sector and its subsectors is what you're after, think about investing in infrastructure funds. Experienced investors should choose infrastructure mutual funds. These funds provide high portfolio diversity because they make investments across a number of industries. You can invest in these programs if you want to contribute to the infrastructure development projects and get the benefits.

Equity schemes comprise infrastructure mutual funds. Consequently, in order to average out market volatility, an extended investment horizon is required. The short-term volatility of infrastructure thematic funds is attributed to their specific theme. The markets are cyclical even though the funds invest in premium stocks. Additionally, the industry. There have been highs and lows in the infrastructure sector. Consequently, the portfolios of infrastructure are extremely vulnerable to the motions. Consequently, only make investments at risk levels that you are comfortable with. Furthermore, it's not a good idea to have more than 10% of your portfolio exposed to infrastructure funds because they concentrate on a single theme.

 

 

How to select Infrastructure Mutual Fund for Investment?

The potential in the infrastructure sector are promising, but you should use caution when selecting an investment plan. The criteria listed below will assist you in choosing the top infrastructure mutual fund for your investment:


1.Outlook for the Infrastructure Sector

The Indian government is concentrating on the infrastructure industry. India plans to make significant investments in infrastructure development to secure the long-term economic success of the nation. The government plans to invest USD 750 billion in railway infrastructure between 2018 and 2030.
The government intends to set up INR 100 lakh crore to create a master plan for multi-modal connectivity as part of the infrastructure development objectives. The government wants to promote economic growth and reduce the cost of logistics through the connection development project.
Moreover, India collaborates with outside partners to develop the nation's infrastructure. India and Japan collaborate to upgrade the northeastern states' infrastructure as part of the strategy. The India-Japan Coordination Forum for Northeast Development was established in order to carry out significant infrastructure initiatives.


2.Past Achievements

An infrastructure fund's past performance does not ensure future profits. To better understand the infrastructure fund's performance, you can compare its returns to those of its peers and benchmark. By examining the infrastructure fund's past performance, you may evaluate how it has performed across several market cycles. Select mutual funds for infrastructure that have regularly beaten peers and the benchmark.

 

3.Investment Goal

Mutual funds focused on infrastructure are made to capitalize on industry advancements and long-term growth prospects in order to generate wealth over the long run. The infrastructure sector stocks are hand-selected by the fund manager based on the industry conditions, management style, growth potential, and track record of the company. In order to guarantee the lowest possible risk, additional steps are done to keep the infrastructure sector's portfolio diversified.

 

4.Horizon of Investment

Since infrastructure mutual funds are equity schemes, they need to be invested for a long time to yield meaningful returns. Short-term infrastructure initiatives can be extremely volatile. If you have a long investment horizon and are well-versed in the industry, only then should you think about investing in an infrastructure fund.

 

5.Appropriateness

Aggressive and seasoned investors looking to add infrastructure sector exposure to their portfolios are the target audience for infrastructure mutual funds. You can diversify your investments across the infrastructure industry with the aid of these funds. Despite the portfolio's good diversification, the value of your investments can fluctuate. An investing horizon that is long-term is required to average out market volatility. Therefore, think about if the funds and subject related to the infrastructure industry are suitable for your investment portfolio, goals, and time horizon.

 

6.Asset Distribution

Within the theme, mutual funds focused on infrastructure provide good diversity. You can better control the volatility of the market by using diversity. Investing possibilities are usually limited when adhering to a specific theme. The fund manager is free to investigate infrastructure stocks of all market capitalizations, though. Consequently, providing the advantage of high-value stock investing. Thus, look for infrastructure funds with a fairly balanced exposure to the industry.
Both India's economic development and the expansion of other businesses depend heavily on the infrastructure sector. Because of this, the government prioritizes infrastructure, building, and development through the Smart Cities Mission, FDI regulations, and sizeable budgetary contributions to the industry. But just as markets fluctuate, so do the infrastructure industry, its subsectors, and the businesses that operate inside it.

Disclaimer: This Stock Analysis is only for informational purposes and should not be considered as investment advice. Always do your research and consult with a financial advisor.

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Frequently Asked Questions

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Yes, the Indian government's increased spending on infrastructure development (₹11.11 lakh crore in 2024 budget) indicates a positive outlook for the sector. This could lead to significant growth in infrastructure companies, potentially benefiting infrastructure-focused mutual funds.

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Infrastructure funds offer several benefits, including:

  • Exposure to Long-Term Growth: They invest in companies positioned to benefit from India's growing infrastructure needs, potentially leading to high returns.
  • Diversification: These funds invest across various infrastructure sub-sectors like power, transportation, and real estate, reducing portfolio risk.
  • Expert Management: Fund managers with expertise in the infrastructure
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Here are some key factors to consider:

  • Track Record: Look for funds with a history of outperforming their benchmark and peers.
  • Investment Goal: Infrastructure funds are for long-term wealth creation, so ensure your investment horizon aligns with the fund's goals.
  • Portfolio Diversification: Choose a fund with good diversification across infrastructure sub-sectors to manage risk.
  • Risk Tolerance: Infrastructure funds can be volatile. Ensure the risk profile aligns with your comfort level.
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 These funds are suitable for investors with a long-term investment horizon and an aggressive risk tolerance. They are ideal for those seeking exposure to the infrastructure sector and its growth potential.



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