Thematic mutual funds: Bet on infrastructure sector with infrastructure mutual funds

For those who find it difficult to identify quality bets in the infrastructure sector can look at thematic funds that focus on infrastructure sector

Infrastructure sector is one sector which is attracting lot of investments both from the government side as well as from the private players. Lot of announcements have been made by the government showcasing infrastructure sector as a priority sector. Indeed infrastructure sector is key for India growth story. 

One of the smartest ways to play the infrastructure story in India is via equity markets. For those who find it difficult to identify quality bets in the infrastructure sector can look at thematic funds that focus on infrastructure sector. 

Tata Infrastructure fund for example is one thematic fund that focuses on the infrastructure sector and is able to outperform its key benchmark index and deliver above category returns. 

Tata Infrastructure Fund is ranked 4 star by CRISIL and has delivered positive risk adjusted returns. The Jenson Alpha for Tata Infrastructure Fund is 7.34 Vs 3.41 average alpha for the funds falling in the same category. BSE Sensex is up by 9 per cent in the past one year while Tata Infrastructure Fund is up by ~24 per cent in similar timeframe. In the past 3 years the fund has delivered ~37 per cent annualized returns, thus outperforming BSE Sensex on a longer time horizon. 

Some of the other infrastructure funds that are outperforming the markets are Kotak Infrastructure and Economic Reform Fund, ICICI Prudential Infrastructure Fund, Quant Infrastructure Fund and DSP T.I.G.E.R Fund. 

Things to remember while investing in thematic funds:- 

As thematic funds invest most of its funds in a single sector, it is considered risky to park funds in a thematic fund. Ideally not more than 10 per cent of your corpus should be invested in any thematic fund. A long term investment horizon of more than 5 years is always recommended while taking exposure to any thematic mutual fund.