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Overview
Infrastructure mutual funds invest around businesses connected with the development, financing, construction, and operation of infrastructure.
Depending on the scheme, this can include companies involved in roads, railways, power, construction, capital goods, logistics, ports, utilities, and related areas.
Infrastructure can benefit from economic expansion and investment spending, but it is also highly sensitive to project execution, government policy, interest rates, and economic cycles.
Explained
Infrastructure mutual funds are thematic equity schemes that invest predominantly in companies associated with infrastructure development and related activities.
A portfolio may include companies involved in:
The actual investment universe depends on how the scheme defines its infrastructure theme.
Explained
Fund managers select companies expected to benefit from infrastructure investment and economic development.
They may analyse:
Infrastructure businesses can require large amounts of capital.
A company with a large order book may appear attractive, but delays, rising costs, excessive borrowing, or weak execution can reduce profitability.
Suitability
Infrastructure Funds may suit investors who:
These funds may not suit investors looking for broad diversification through a single equity scheme.
Advantages
Investors can gain exposure to companies involved in building and supporting physical and economic infrastructure.
Periods of rising government and private capital expenditure can create business opportunities for infrastructure-related companies.
Infrastructure is broader than construction alone. A fund may gain exposure to engineering, power, transportation, logistics, industrial equipment, and materials.
Infrastructure companies can be difficult to evaluate because project execution, debt, order books, and cash flows matter significantly. Professional fund managers perform this analysis for investors.
Before you invest
Infrastructure activity often rises and falls with economic and capital expenditure cycles. Returns can therefore be uneven.
Public infrastructure spending, regulations, project approvals, and government priorities can significantly influence parts of the sector.
Winning a project does not guarantee profitable execution. Delays, cost overruns, land issues, or regulatory problems can hurt company earnings.
Infrastructure projects can require significant borrowing. High leverage can become particularly problematic when interest rates rise or project cash flows disappoint.
Cement, steel, fuel, and other input costs can affect project profitability.
Infrastructure stocks can become expensive during periods of strong market optimism. Strong order books do not automatically justify any valuation.
Taxation
Infrastructure Funds generally qualify as equity-oriented mutual funds when they meet the applicable tax requirements.
For qualifying units held for more than 12 months, gains are generally treated as long-term capital gains.
Long-term capital gains covered by Section 112A are generally taxed at 12.5% above the applicable annual exemption threshold.
For qualifying units held for 12 months or less, gains are generally treated as short-term capital gains and taxed at the applicable special rate under Section 111A.
Tax provisions can change. Check current rules before making redemption decisions.
Step by step
Good to know
Infrastructure mutual funds are thematic equity schemes focused on companies associated with infrastructure development and related industries.
Depending on the scheme, portfolios can include construction, engineering, power, logistics, transport, cement, capital goods, utilities, and related businesses.
They can be. They carry equity risk along with concentration, economic-cycle, policy, debt, and project-execution risks.
Higher infrastructure expenditure can create opportunities for relevant businesses, but stock returns still depend on company fundamentals, execution, valuations, and market conditions.
Beginners should understand that thematic funds are more concentrated than diversified equity funds. Suitability depends on the investor's knowledge, portfolio, goals, and risk tolerance.
Recap
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FUND
₹61.51
2.48%7.23%
22.59%
20.74%
₹77.32
1.82%14.96%
20.75%
20.11%
₹385.96
2.46%12.1%
19.16%
20.52%
C
Canara Robeco Infrastructure Fund Direct Plan GrowthEquity Infrastructure₹183.42
3.02%0.18%
18.27%
18.42%
₹79.38
2.93%2.24%
17.95%
18.2%
I
ICICI Prudential Infrastructure Fund Direct Plan GrowthEquity Infrastructure₹214.26
2.44%4.69%
17.1%
22.05%
₹45.09
2.37%8.88%
16.83%
18.12%
₹116.5
2.86%10.34%
15.82%
16.64%
₹159.18
2.24%0.26%
15.81%
18.81%
₹80.85
3.37%9.48%
15.78%
19.01%
₹60.39
2.48%7.22%
22.56%
20.64%
₹72.95
1.82%14.95%
20.74%
20.1%
₹56.79
2.46%12.11%
18.88%
19.92%
C
Canara Robeco Infrastructure Fund Direct Plan Payout of Income Dist cum Cap WdrlEquity Infrastructure₹83.18
3.02%-0.08%
17.98%
18.16%
₹53.12
2.92%2.25%
17.64%
17.98%
I
ICICI Prudential Infrastructure Fund Direct Pln Reinvestment of Inc Dist cum Cap WdrlEquity Infrastructure₹46.81
2.46%0.83%
16.25%
20.34%
₹45.06
2.37%8.87%
16.83%
18.11%
₹48.83
2.86%9.96%
15.5%
16.29%
₹104.95
2.6%3.13%
14.73%
14.95%
₹81.78
3.37%9.48%
15.78%
19.01%
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