Should you invest in Infrastructure Mutual funds now?

Should you invest in Infrastructure funds now

Infrastructure stocks have not been performing well after the 2008 market crash. The new Government has indicated in its manifesto that it would mainly focus on Infrastructure development and construction. Such Infra development is going to provide enormous opportunities to companies which would directly or indirectly involved in infrastructure. However, identifying such companies to invest would be difficult at this point of time. Hence, infrastructure mutual funds would help you to overcome this. There are several reasons why you should invest in Infrastructure Mutual funds now to multiply your money. In this article, I would provide some insights about Infrastructure sector, how they are expected to perform well in next 4-5 years and why you should invest in Infrastructure Mutual funds now?

Also Read: Best Midcap/Smallcap funds to invest in 2014

What are Thematic Infrastructure Mutual Funds?


Infrastructure mutual funds are those which invests in stocks that either directly or indirectly involved in Infrastructure development. Companies which are into Energy, Real Estate, Power, Metals etc., would fall under the Infrastructure sector. Companies like Banking, Finance, Transportation, etc., would contribute indirectly to Infrastructure development. Infrastructure mutual funds would invest in all these stocks.

How is Infrastructure stocks performance in last 5 years?


Infrastructure stocks have crashed heavily in the 2008 market crash. Infrastructure mutual funds have seen the huge negative impact. Though Sensex has recovered and reached new highs, Infrastructure stocks are still lagging behind as there was no effort till now for Infrastructure development.

Why Infrastructure sector would boom in the next few years?


Infrastructure funds

New Government main focus as it indicated in its manifesto is for Infrastructure Development which has been neglected in the last few years. The focus would be constructing world class highways, modernization of national highways and airports, setting up gas grids and improvements in power sector etc.

Companies which are directly or indirectly contributing to the development of infrastructure would grow during Infrastructure development. Infra stocks have been underperforming in the last few years. During this process, such stocks are expected to perform better and its shares' prices can increase.

Private investment in Infrastructure development is currently at 30% and is expected to grow to 50% in coming years.

What are the best performing Thematic Infrastructure Mutual funds?


Below are some of the top infrastructure mutual funds which you can look to invest now.

Top 10 Infrastructure Mutual funds in India

Also Read: 4 Tips to maximise returns from SIP in mutual funds

Conclusion: Infrastructure sector outlook is positive. The new government is expected to focus on Infrastructure development in coming years. Hence, I feel investors can look to invest in these best infrastructure mutual funds for the next couple of years so that your money would grow at a faster pace. Instead of investing in lump sum investment, look to invest through SIP.

Happy investing in Infrastructure Mutual Funds !!!

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Suresh
Should you invest in Infrastructure Mutual funds now

23 comments

  • vinita

    Dear sir,

    I am new to mf. I want thinking to invest 50000 which is my saving for high returns and for 5 years. I was searching on internet and found new nfo frm l&t called business cycle plan. Please tell me is it good? if not then tell me best mf to invest.  and also i must do it directly or via some agent?

    • Vinita, Invest in these funds. 1) Large cap – HDFC Top-200 / ICICI Pru focussed blue chip fund 2) Mid-cap – HDFC Mid-cap opps fund / Franklin India smaller co’s / SBI Midcap fund 3) Balanced – You can check HDFC Prudence / ICICI Balanced fund. Don’t invest in new NFO’s like L&T business cycles as of now. You can invest direct mutual funds, however you need to do KYC on your own

  • MOHAMMED

    dear sir,

    i like to invest 3 lakh for one year wr i get good return

    • Mohammed, Since you are looking for short term of 1 year, just invest in bank FD or post office schemes. You should not invest in MF’s or stocks as they are for medium to long term.

  • Santosh

    Hi Suresh,

    Thank you for the informative articale. How is the outlook for Pharma and FMCG sector  ?  i have invested in SIPs for SBI FMCG, Relaince pharma , SBI pharma for the past 1 year , am thinking whether to stick to those or move to infrastructure, banking funds now. i undersatnd these sctors are not peforming very well currently. Pls advise.

  • Vignesh

    Hi Suresh,

     

    Need some clarifications on MF. I am very new to MF and planning to invest in MF. I came across few samples and found that they are open for very short time and with a fixed tenure. For example, SBI Mutual Fund with Rs. 10 Face value and tenure of 400 Days. Is it means, i will get 1000 units on buying at 10 Face Value? Will i be able to sell / liquidate the Mutual Fund only after 400 days? If it has a better growth before that, wont i be able to liquidate it?

     

    Regards,

    Vignesh. S

    • Vignesh, These are fixed maturity plans (FMP). Means they would get closed at 400 days automatically and any returns are directly credited to your account. Instead of investing in FD, you can look them as alternative option as they provide higher returns compared to FD. FMP’s cannot be redeemed with mutual fund house. However they are traded on stock exchange and you may need to sell them at lower price if you want to exit before maturity.

  • shiv anand

    Suresh,
    thank you for the article. it was very helpful.after many years i’m going to invest again infeastructure funds. previous experiences have been very bad for me.

    Now i will start a sip in hdfc infrastructure fund.

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