Nilanjan Dey

KolkataMarch 25In the backdrop of the Budget announcement to allow mutual funds to launch dedicated infrastructure funds, quite a few funds, each carrying the `infrastructure’ tag, currently make up a dynamic segment.

This is marked by investments that go beyond conventional infrastructure-related themes.

SEBI has also decided to set up a committee for framing guidelines for infrastructure funds.

With at least half-a-dozen funds that directly fit the bill and a few others that bear different forms of the same label, infrastructure funds are exposed to sectors that range from energy, engineering and commodities to construction, hospitality and banking.

Diversified

Asset management companies that offer the products suggest that the term `infrastructure’ is being used somewhat loosely, covering critical areas of the economy and not limited to the so-called basic or core segments. These funds, therefore, are quite diversified in character, allocating to a number of sectors for achieving their investment objective.

Fund houses

The fund houses that manage infrastructure products include Prudential ICICI, UTI, Birla Sun Life, Tata, Canbank and Sahara. The space they occupy is quite active, sources point out, while referring to recent changes in their holdings. For some of them, the asset base is not too insignificant either.

Among the sectors that most of these are invested in are oil and gas, metals, capital goods and real estate. Services including information technology, banking and hotels also form a key part of their portfolios.

It may be mentioned here that a few other funds also revolve around the infrastructure theme. Principal MF, for instance, has a broad-based product aimed at infrastructure and services industries, while DSP Merrill Lynch has a product named as DSP ML T.I.G.E.R. Fund. The acronym stands for `The Infrastructure Growth and Economic Restructuring’.

Mixed returns

The issue before the MF industry stems from the Budget announcement on dedicated infrastructure funds, which has now spurred SEBI to establish a committee. The latter has said it will suggest an action plan to operationalise the announcement.

Committee members

The committee will be headed by Mr U.K. Sinha, CMD of UTI MF, while Mr Milind Barve, MD of HDFC MF, and Mr S. Naganath, President of DSP Merrill Lynch MF, will be its members. Mr P.K. Nagpal, CGM of SEBI, will be the member secretary.

Infrastructure funds in the recent past have turned out a mixed set of returns, the performance charts suggest. Considering the last one year, some of the better performers are Pru ICICI Infrastructure (24 per cent), UTI Infrastructure (16 per cent) and Tata Infrastructure (13 per cent). Other funds like DSP ML T.I.G.E.R. and Principal Infrastructure & Services have provided 18 per cent and 6 per cent, respectively, during this period.