Infrastructure Boom Leads To Slew Of MF Plans

Mutual funds are increasingly launching schemes to take advantage of the infrastructure boom, both within the country and globally.

The schemes will invest in companies that will benefit from the multi-billion dollar investments required in ports, roads, telecom, construction, engineering and aviation across the world in the coming years.

Kotak Mutual Fund launched the Indo-World Infrastructure Fund’ on 27 November 2007. This is a three-year close-ended equity fund aiming to ride on the Indian infrastructure story, and more importantly, the global boom in infrastructure.

Kotak’s fund is the second infrastructure scheme after Tata Mutual Fund launched the ‘Indo-Global Infrastructure Fund’ in September 2007.

Kotak MF’s new fund offer will invest 65% of its funds in Indian infrastructure theme and the remaining in overseas equity or mutual funds connected with the infrastructure theme.

India alone requires investments worth $500 billion in five years. The fund will offer an excellent investment avenue for long term investors looking to gain stable returns from exposure to companies likely to benefit from infrastructure investments in India and rest of the world.

Indian mutual funds are allowed to invest $5 billion outside the country. In September, Sebi hiked the overseas investment limit for individual mutual funds to $300 million.

Riding high on the booming domestic infrastructure sector, DBS Cholamandalam and SBI Mutual Fund have also launched mutual funds that are investing in local infrastructure companies.

All the infrastructure schemes are doing fairly well, courtesy the rising stock prices of companies catering to the infrastructure theme one way or the other, such as Larsen & Toubro, Grasim, Gujarat Ambuja Cement, IDFC, Reliance Industries and ONGC.

ICICI Prudential’s Infrastructure fund gave returns of 75.97% and Tata Mutual Fund’s Indian infrastructure granted 72.65% in the past one year (as on 28 November 2007).

DSP Merrill Lynch’s Tiger fund and UTI’s infrastructure fund generated annual returns of 66.34% and 65.37% respectively.

Canara Robeco Infrastructure gained the top position in the category with 79.18% returns, followed by Sundaram BNP Paribas CAPEX Opportunities Fund with 79.17%