Category: Personal Finance

Quant Infrastructure Fund Direct Growth

This is an open-ended equity plan with a 5-star rating from Value Research and was established in September 2007 as a thematic fund. The minimum and maximum asset allocation to equity and equity-linked instruments associated with the infrastructure sector are 80 percent and 100 percent, respectively. The fund’s maximum asset allocation is 20% for other equity and equity-related securities, 20% for debt and money market instruments, and 10% for REIT and InvIT units.

Quant Infrastructure Fund Direct-Growth returns in the previous year were 119.08 percent, according to the data of Groww, and it has provided 17.16 percent average annual returns since its inception. The fund has a 2.15 percent expense ratio, which is higher than most other funds in the Sectoral-Infrastructure category. The construction, services, financial, automobile, and energy sectors account for the fund’s top equity sector allocation. Larsen & Toubro Ltd., Man Infraconstruction Ltd., Adani Ports and Special Economic Zone Ltd., Ashok Leyland Ltd., and Sunteck Realty Ltd. are the fund’s top five holdings.

This fund has a Net Asset Value (NAV) of Rs 20.44 and an Asset Under Management (AUM) of Rs 85.06 Cr as of October 22, 2021. A minimum Systematic Investment Plan (SIP) in this fund can be initiated with Rs 1000 and the fund imposes an exit load of 0.50 percent if purchased units are redeemed within 3 months of the investment date.

ICICI Prudential Infrastructure Fund Direct-Growth

This fund is an open-ended equity scheme having an infrastructure theme and was launched in the year 2003 by the fund house ICICI Prudential Mutual Fund. This fund has a 3-star rating from Value Research and Morningstar, and its 1-year returns are 101.89 percent, with an average yearly return of 13.75 percent since its debut.

The fund has the major equity allocation across Energy, Construction, Financial, Metals, Communication sectors. National Thermal Power Corp. Ltd., Oil & Natural Gas Corpn. Ltd., Bharti Airtel Ltd., Larsen & Toubro Ltd., and Axis Bank Ltd. are the fund’s top five holdings. The fund’s expense ratio is 1.74 percent, which is higher than most other funds in the infrastructure category.

As of October 22, 2021, the ICICI Prudential Infrastructure Fund has a Net Asset Value (NAV) of Rs 82.91 and an Asset Under Management (AUM) of Rs 1679.93 Cr as of 30th September 2021. This product requires a minimum purchase amount of Rs 1000, and the fund charges an exit penalty of 1 percent if acquired units are redeemed within 15 days of the investment date.

IDFC Infrastructure Fund Direct Plan Growth

It is an open-ended equity scheme investing in the Infrastructure sector since March 2011. Value Research and Morningstar have given IDFC Infrastructure Fund Direct Plan-Growth a 3-star rating. IDFC Infrastructure Direct Plan-Growth returns over the last year have been 103.17 percent, with an average annual return of 13.17 percent since its debut.

The fund’s top five holdings are Larsen & Toubro Ltd., Ultratech Cement Ltd., JK Cement Ltd., PNC Infratech Ltd., and Transport Corporation Of India Ltd. The fund’s major equity allocation spans the Construction, Services, Energy, Engineering, and Metals sectors. The fund has a 1.25 percent expense ratio, which is lower than most other funds in the same category.

The ICICI Prudential Infrastructure Fund has a Net Asset Value (NAV) of Rs 27.08 as of October 21, 2021, and an Asset Under Management (AUM) of Rs 649.60 Cr as of September 30, 2021. If purchased units of more than 10% are redeemed within 1 year of the investment date, an exit load of 1% applies, and SIP in this fund can be started with a minimum amount of Rs 100.

3 Best Infrastructure Equity Funds In 2021 Based On 1 Year Returns

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LIC Mutual Fund has recently launched a new balanced advantage fund (BAF) that will invest in equity, debt, and money market tools. BAF is kind of a hybrid mutual fund, that invests both in equities and debt for better profitability and lesser risk exposures. BAFs are also known as dynamic asset allocation schemes, that use multiple instruments to determine which stocks seem lucrative. Here, LIC mutual fund is now also planning to reduce the volatility by staying in the field of BAFs by sticking between both equity and debt. LIC BAF will be benchmarked against the LIC MF Hybrid Composite 50:50 Index, where the index is structured with equal weightage to Nifty 50 and the 10-Year G-Sec Index.

Equity-debt management model

Factors like where to invest and how much to invest in stocks and bonds are important for BAFs. LIC BAF is having their in-house model to determine this portfolio of equity-debt management, where interest rates, 1-year forward price-earnings ratio, and earnings yield have been taken up as significant factors.

While it comes to the question of the equity allocation, LIC BAF will invest highly in the large companies, whilst coming on the fixed-income ground, LIC BAF will prefer the high-quality bonds issued by governments, public sector undertakings, and the AAA-rated private sector corporates.

With a hike in interest rate, the equity market generally sees correction and vice versa. Commenting on that, Yogesh Patil, Head-Equity, LIC Mutual Fund said, “The inverse correlation between equity and interest rates is core to our asset allocation model. Forward price to earnings multiple bands arrived at using interest rates and earnings yield help to increase allocation to equity when it is attractive, and reduce when it has run-up.” That makes the scheme interesting.

Patil added, “The scheme can take advantage of the sharpest moves in stock markets that may be short-lived. So a flash crash can be used to deploy more money in equity. Also, equity can be sold in a flash up-move.” On the other hand, to avoid over-trading, asset rebalancing will be done only when the recommended allocation changes by at least 2% points.

BAFs usually maintain gross exposure to the equities at around 65% percent, to ensure the scheme is treated as an equity fund for taxation. BAF lately has given quite good risk-adjusted returns. So, if your interests are staying around BAFs, then you can look out for some other BAFs also, that are already operating in the market with good records. LIC BAF can be an additional lookout for you. The LIC BAF offer will be closed on November 3, this year.

(Also read: What Is A Bluechip Fund: Importance In Mutual Fund And SIP)

(Also read: What is SIP And Should You Start Investing Now?)