Why Have In­fra­struc­ture Funds in Your MF Portfolio?

Consumer Voice - - Infrastruc­ture Mutual Funds -

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.

Some To-Dos

• 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.

The Not-To-Dos

• 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.

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