The long-term investments required for infrastructure projects, coupled with the volatility in the market, kept investors away from investing in infrastructure funds over the past few months.
With the Finance Minister’s emphasis on infrastructure in the Union Budget 2009-10, the infrastructure funds are back in vogue. Under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Rs 12,887-crore allocation was granted for urban infrastructure in Budget 2009-10, up by 87% over that of 2008-09. Moreover, the Finance Minister said that the government targets to increase infrastructure investments to 9% of GDP by 2014.
“These budgetary measures have culminated in a festive spirit in the mutual funds industry. The government’s exclusive focus on infrastructure will definitely prop-up infrastructure funds, leading to infrastructure development in the country,” says J Bhattacharjee, Proprietor of J Bhattacharjee & Company, a Delhi-based equity broking firm.
 Improving performance of infrastructure funds
Although the last 2 years’ performance record suggests that there were at least 10 diversified equity funds that outdid the average returns from most infrastructure funds, with the exception of Reliance Diversified Power that outperformed IDFC Premier Equity, the last few months have witnessed a robust improvement in infrastructure funds returns.
Over the last 6 months, Taurus Infrastructure Fund has given a whopping 119% returns, as against a reasonable 21% returns in the last 1 year. Sahara Infrastructure Variable Pricing, which gave around 20.9% returns in the last 1 year, has managed to give investors 78.23% returns in the last 6 months.
“These figures are hard to ignore and considering the government’s impetus on infrastructure projects in Budget 2009-10, it can be said that investing in infrastructure funds are a must for investors planning to play Indian equity,” opines Sunil Kumar Jain, MD of Arihant Capital Markets Limited, an equity broking firm in Indore, Madhya Pradesh.
Going forward, confidence in the industry, stability in the economy and the willingness to make long-term investments and in turn benefit from it will definitely give infrastructure funds a momentum.
Jeeta Bandopadhyay |
