Mutual Fund advisers and financial planners have been recommending infrastructure mutual funds to their clients lately. Based on the research, experts quote that the infrastructure category will be offering satisfactory returns in the coming years. According to them, it can be a safe bet for those investors who are willing to invest in sector-specific schemes. Adding to this, the experts have also advised investors to invest with a minimum horizon of seven years. This is because these sector-specific funds are considered risky as their investment is highly concentrated in a particular sector. If you have too much affinity towards HDFC AMC and want to park your money there only, then MySIPonline’s research desk, after undertaking deep research and analysis process, suggests you HDFC Infrastructure Fund which is a product of HDFC Mutual Fund.
HDFC Infrastructure Fund: An Outline
Being an open-ended infrastructure-centered scheme, it aims to invest majorly in equity and equity related securities of those companies which are either involved in or are expected to benefit from the growth and development of infrastructure. It can invest maximum up to 35% of the fund in non-infrastructure related companies and minimum 65% in infrastructure companies.
Portfolio Composition
The fund has an average market capitalization of Rs.14,685.05cr with an allocation of 33.82%, 7.83%, 19.70%, 37.16%, and 1.49% in giant, large, mid, small and tiny-sized companies, respectively. It is too much exposed to the sectors such as construction and engineering as compared with NIFTY 500 taken as its benchmark. It is broadly comprised of three regions of investments which are:
- Asset Financiers- Banks and Infrastructure Financing Companies
- Asset Creators- Engineering and Construction Companies
- Asset Owners and Developers- Companies that own infrastructure projects
Let’s have a look at the percentage breakup of the sector allocation of the fund as compared with its benchmark.
Sector Allocation in %
Source: Value Research
The fund is being managed by Mr. Srinivas Rao Ravuri who has over 22 years of experience in financial markets, primarily in equity research and fund management. It was launched on March 10, 2008, and since then it has proffered 6.52% average annual returns. Soon after its launch in 2008, the fund took full advantage of the bearish market of 2009 and bestowed investors with a whooping return of 95.63%.
But, it couldn’t bear the major downfall of 2011 and incurred comparatively more loss to its investors as its benchmark. Again the years 2013, 2015, and 2016 were the years of breakdown for the investors. If we look at the years when the fund performed well, it can be clearly seen that it has prosperously outperformed its benchmark by catering remarkable returns.
Why Invest in Infrastructure Fund?
With the growing Indian economy, infrastructure sector too is now on a structural and sustained uptrend. Also, the government of India has now started focusing more on developing the infrastructure areas which include roads, railways, metros, defense, urban infrastructure, housing projects, manufacturing, etc. Further, the ‘Make in India’ project started by the Prime Minister Narendra Modi has created a favorable environment and greater scope of development for infrastructure. This, in turn, will assist in gathering improved profitability and generating lower finance costs. Hence, MySIPonline will suggest you to invest in HDFC infrastructure Fund, if you can bear moderately high risk and have investment tenure of at least seven years.
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