Why Have Infrastructure Funds in Your MF Portfolio?
a) Infrastructure funds are likely to perform better during the next 3 to 5 years (the 2017–18 Budget has provided Rs 241,387 crore for the infrastructure sector [with Rs 131,000 crore for railways]). b) The present government is bullish on providing infrastructure (like roads, rails and shipping) to boost the economy and also create substantial employment opportunities. c) The general expectation is that capital expenditure, both from private companies and the Government, is likely to increase in the coming years. d) The investor market expects falling interest rates – if true, it is bound to provide a fillip to private companies in expanding their capacities.
• Diversify your portfolio and limit your exposure to a particular sector. It’s a thumb rule of investment that one must not take too much risk. • Keep your exposure to a particular infra sector to 10–15 per cent of the total investment portfolio. • By spreading your investments across sectors, you can minimise your risks to a great extent. • Invest through a systematic investment plan (SIP) or a systematic transfer plan (STP) to benefit from any likely volatility in the market.
• As the wise ones say, always diversify your portfolio and limit your exposure to a particular sector. Hence, desist from investing a lump sum in infrastructure funds. • Maximise your investments within a time frame of three to five years (infra funds have given better returns over a three-year investment period than for a five–seven-year period). • When the stock markets crashed in 2008, infra funds did not get over the negative impact till 2014. With the new government in office, the sector is picking up. But don’t throw caution to the winds. • In a growth-oriented economy, infrastructure funds may not get you stable income in the short term but the fund seeks to achieve capital growth in the medium term.
We chose eight infrastructure funds to compare them on parameters such as net assets, three-year and five-year performance, minimum investment required, NAV (growth and dividend), returns, expense ratio, last declared dividend, risk grade and returns grade. We gave the highest weightage (15 points) to consumer feedback, based on which the most important and beneficial variables were shortlisted. The eight funds have been chosen based on their NAV as of 29 March 2017, with the criterion being restricted to 3 star, 4 star and 5 star ratings.