The infrastructure theme in mutual funds has invited a lot of attention in the last 3-4 years. Companies in the sector have seen a phenomenal growth and UTI Infrastructure Fund took advantage by making an entry at the right time.
The fund entered the market with an objective to provide capital appreciation through investments in stocks of companies engaged in the sectors.
A jump by 245% in the assets under management (AUM) over the last two years itself is a proof of the growing popularity of the fund.
UTI Infrastructure has managed to grow by 27.68% compound annual growth rate (CAGR) since the past three years. It did outperform its benchmark BSE 100 by a greater margin across all timeframes, though the recent downturn in the market has dragged down the fund?s ranking over the past few months.
It crossed the Indian boundaries by delivering best performance in 2007 in the global category and was ranked numero uno globally by a reputed mutual funds rating company.
The past asset allocation for the fund has been very aggressive. The fund has been allocating about 91% of the corpus on an average in equities since the past two years, though the cash component has grown since January 2008 due to southward movement of infrastructure-related companies. The fund, which used to diversify the portfolio over all market-cap scrips, has gradually become more of a large-cap-oriented scheme over the last one year. It took all advantage of rally witnessed in small- and mid-cap stocks from time to time. Since the second half of 2007, the portfolio has developed a bias for large-cap stocks. Currently, 51.04% of the assets are invested in companies with market capitalisation of more than Rs 8,284 crore.
With rising AUM, UTI Infrastructure Fund increased the count of stocks in the portfolio. It operated a reasonably diversified portfolio of over 47 stocks on an average in the past one year.
The sector strategy for the fund has also been in line with the stated objectives. Sectors such as power, telecom, engineering, housing & construction and oil & gas have been the most favoured sectors since the past one year. The fund manager has followed buy and hold strategy for reaping good growth in stocks.
The fund’s performance history, compared with other infrastructure funds, is healthy and the fund has been one of the best-performing ones. Going forward, the thrust on infrastructure development is expected to continue and many more opportunities in the sector are expected to unfold. Although high in risk than diversified equity funds, infrastructure funds offers a good deal as we look at the current potential available. It will be wise to opt for a less volatile fund with well-diversified portfolio.
UTI Infrastructure fund certainly deserves to be a part of investment portfolio to gain from infrastructure investment potential.
