Infrastructure mutual funds are sectoral mutual funds. These funds invest the entire money in just one sector, for instance, infrastructure. Infrastructure mutual funds invest mainly in stocks of construction companies, capital goods, and metals sectors. Statistics reveal that in 2020 private investors spent 35% of the investments in urban infrastructure. This upward trend continued in 2021 too and is bound to rise further in 2022.
Sectoral mutual funds like infrastructure mutual funds perform significantly well in times when the sector flourishes in bull markets. But do not perform well in bear markets. If you want to invest in infrastructure mutual funds, check out this list of 10 best-performing infrastructure mutual funds. Read on!
|S No.||Fund Name||Returns Per Annum (in %)||Expense Ratio (%)||Current Value (in Lakhs)|
|1.||Quant Infrastructure Fund||31.35||0.58||INR 12.96|
|2.||Invesco India Infrastructure Fund||20.53||0.82||INR 10|
|3.||ICICI Prudential Infrastructure Fund||18.38||1.73||INR 9.49|
|4.||Canara Robeco Infrastructure Fund||18.18||1.46||INR 9.45|
|5.||Tata Infrastructure Fund||18||1.65||INR 9.4|
|6.||Kotak Infrastructure and Economic Reform Fund||17.1||1.22||INR 9.2|
|7.||Franklin Build India Fund||16.7||1.29||INR 9.11|
|8.||SBI Infrastructure Fund||16.57||1.93||INR 9.08|
|9.||DSP T.I.G.E.R Fund||16.14||1.57||INR 8.98|
|10.||IDFC Infrastructure Fund||15.85||1.2||INR 8.92|
Since these funds are high-risk-high-reward, bull markets can fetch significant returns for infrastructure mutual funds. Growth of a particular sector can guarantee even higher returns and these types of funds are perfect for wealth multiplication within a time horizon of approximately 3 years.
Infrastructure mutual funds are sectoral and investing in such funds is guaranteed to improve the sector as well. This also indirectly helps in the growth of the nation’s economy. Conversely, certain government policies may also affect infrastructure mutual funds heavily. The right timing of entry and exit from these funds is crucial to capitalize on the returns and for this, the investors need to be experienced or have financial advisors who help them.
Infrastructure mutual funds are suitable for experienced investors. Experienced investors are also advised to invest not more than 10% of total investments.
Sectoral mutual funds like infrastructure mutual funds are one of the riskiest types of mutual funds in the market. Infrastructure mutual funds invest in just one sector. A fall in this particular sector affects the stocks to a greater degree with no safety net.
If you decide to invest in infrastructure mutual funds, it’s advised to have an investment horizon of around 3 years.
It is highly crucial to evaluate the long-term investment goals before investing. Deciding the kind of returns you need, how much risk you’re willing to take, and the purpose of investing (for retirement, wealth generation, beat inflation, etc.) will help you map out your needs better. This will help you choose the perfect infrastructure mutual fund suitable to your needs.
Infrastructure mutual funds are high-risk-high-reward funds, which when invested for a period of approximately 3 years can generate huge returns in bull markets. Investors who have a high-risk appetite and wish to generate a lot of wealth long-term can invest in these types of funds. Align with your financial objectives to know if you are willing to take high-risk.
Past performance predicts future performance. Examining a mutual fund’s past performance before investing in it can give you meaningful insights as to how the said fund is going to perform in the future. A fund that was able to meet the goals set in the past is more likely to perform well in the future. Determining the selected fund’s historical returns and comparing it with other similar mutual funds in the market will also help in giving better clarity to you.
Almost all fund houses collect a fee called expense ratio from investors to cover all the administrative expenses (refer to the aforementioned table for particular expense ratios). This fee is a small percentage of a scheme’s total assets and differs from one fund to another in the market. It’s important to analyze each fund’s expense ratio and compare it with other similar funds before investing because while the ratio in itself might seem less, the absolute amount may be high.
Sectoral funds and infrastructure funds as a subset of those are essentially a class of equity funds. Thus, these follow the same tax structure as other equity funds. The capital gains earned on exit within 1 year are treated as Short Term Capital Gains (STCG) and are taxed at 15%.
If an investor holds investments for more than a year, the gains are classified as Long Term Capital Gains (LTCG) and are free if the profits fall under ₹ 1 Lakh, but taxed at 10% if the gains exceed ₹ 1 Lakh. 10% TDS (Tax Deducted at Source) is deducted on dividends exceeding INR 5000 earned.
The key to generating high returns is to hold on to the investments for a longer time horizon (approximately 3 years for infrastructure mutual funds) and let the wealth multiply. Identifying the best sectors that perform well despite the market conditions is important to gain high returns and the infrastructure sector is definitely one of them. If you are ready to start investing, you can visit Navi Mutual Fund.
*Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.