5 Best Infrastructure Mutual Funds to Invest in 2017

5 Best Infrastructure Mutual Funds to Invest in 2017

Roboadviso     Top 5 Mutual Funds     Posted On, Wed 2nd August, 2017     1 comment
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Infrastructure mutual funds are a type of fund with investments in stocks and firms that are indirectly or directly involved in development of infrastructure in India.

Companies doing business in industries such as real estate, energy, metals, power, etc. can be categorized under the infrastructure division. Finance, banking, and transportation companies are indirectly connected to development of infrastructure. Infrastructure funds invest in the stocks of companies belonging to all the above mentioned sectors.

The shares of infrastructure companies crashed and burned during the financial crisis of 2008. The negative impact of the market crash of 2008 was huge on infrastructure funds and it remained so for nearly 6 years till 2014. The Sensex attained new highs in 2014 after a successful recovery. However, there was no sustained growth in infrastructure stocks as no effort was being made for development of infrastructure.

The turning point for the sector came after a new government assumed power in the center in May 2014. The Modi Government was keen on infra development and consequently infrastructure mutual funds stopped lagging and began offering good yields to investors. The category of infrastructure mutual funds has had 20.57 percent returns in the past 1 year and 22.51% returns per annum over the last 3 years. The Indian Government is increasing its spending on infra development every year and hence the sector will continue to boom over the next few years.

It is important to avoid going overboard with investments in infra mutual funds. Since these funds have investments in just one sector, they are very risky. Investors need to keep an eye on such funds and regularly monitor the portfolio performance. Ideally, infrastructure funds are suited for investors who are for high risk high return short term investments.

The general rule of the thumb is to always diversify the investments in the portfolio and restrict exposure to a specific sector. Investments in a specific sector should be not more than 10 to 15 percent of the complete portfolio. Spreading the investments across many sectors can help minimize risk to some extent.

The quality of an infrastructure fund can be determined by its star rating by different expert organizations, its returns over the last 1, 3, and 5 years, its rating agency ranking, and over INR 100 crores as AUM or assets under management.

Presented below is a list of the 5 best infrastructure mutual funds to invest in.

1) L&T Infrastructure Mutual Fund

The aim of the L&T Infrastructure Mutual Fund scheme is generation of capital growth via investments mainly in firms involved in the infrastructure sector. The portfolio is made of stocks of companies that are fundamentally sound and have the capacity and the potential to deliver better growth and earnings in the long term.

L&T Infrastructure Mutual Fund has shown good performance in the short term of 1 year as well as medium term of 5 years. Its yearly returns are 41%, 33%, and 17% over the past 1, 3, and 5 years respectively. Investment of INR 5,000 every month via Systematic Investment Plan/SIP in L&T Infrastructure Mutual Fund over the last five years, totaling to a sum of INR 60,000 as investment, would have resulted in a corpus of INR 104,000.

It is one of the best infra funds for investments in 2017-18.

2) Franklin Build India Fund

Franklin Build India mutual fund seeks to generate capital growth via investments in firms that are indirectly or directly engaged in activities associated with the infra sector. Infra associated activities can be operations, development, maintenance and management of different infrastructures like energy, transportation, resources, etc.

It is a great fund to invest in due to its good performance in the medium and short term period of 5 to 1 years. The fund provided 40 percent returns in the past one year, 36 percent yearly yields in past 3 years, and 25 percent yearly returns in past 5 years. Investment of INR 5,000 every month via SIP in Franklin Build India Fund over the last five years, totaling to a sum of INR 60,000 as investment, would have resulted in a corpus of INR 115,000.

It is one of the best infra funds for investments in 2017-18.

3) DSP Blackrock India TIGER Fund

The objective of DSP Blackrock India TIGER Fund scheme is generation of capital growth via investments in equity linked and equity instruments of companies which may gain from the ongoing economic reforms and structural changes occurring in India. The portfolio of the scheme is efficiently diversified across market capitalization, sectors, and between public sector and private firms. The scheme will definitely gain from increases in spending by the government on infra projects, corporate capex cycle revival, and higher participation by private players.

DSP Blackrock India TIGER Fund has offered good performance in the short to medium term of one to five years. Its yearly returns are 35 percent, 28%, and 14% over the past 1, 3, and 5 years respectively. Investment of INR 5,000 every month via SIP in DSP Blackrock India TIGER Fund over the last five years, totaling to a sum of INR 60,000 as investment, would have resulted in a corpus of INR 94,000.

It is one of the top infra funds for investments in the current year (2017).

4) Kotak Infrastructure and Economic Reforms Fund

The objective of Kotak Infrastructure and Economic Reforms Fund is generation of capital growth in the long term via investments in equity and equity linked securities of companies involved in infra sector and extended economic reforms resulting in economic growth and development of the country.

Kotak Infrastructure and Economic Reforms Fund has remained competitive or outperformed its category peers in the short to medium term of one to five years. Its yearly returns are 34 percent, 33%, and 16% over the past 1, 3, and 5 years respectively. Investment of INR 5,000 every month via SIP in Kotak Infrastructure and Economic Reforms Fund over the last five years, totaling to a sum of INR 60,000 as investment, would have resulted in a corpus of INR 100,000.

5) Birla SL Infrastructure Mutual Fund

The Birla SL Infrastructure Mutual Fund scheme seeks to offer capital growth via investments primarily in a portfolio that is well diversified and comprising of equity linked and equity instruments of companies that are engaged in the development and growth of infrastructure development in the country.

Birla SL Infrastructure Mutual Fund has offered good performance in the short to medium term of one to five years. Its yearly returns are 32%, 27%, and 15% over the past 1, 3, and 5 years respectively. Investment of INR 5,000 every month via SIP in Birla SL Infrastructure Mutual Fund over the last five years, totaling to a sum of INR 60,000 as investment, would have resulted in a corpus of INR 94,000.

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