Fund of Fortnight

Reason for recommendation 

L&T Infrastructure Fund - Direct Plan (Growth)



The maiden budget presented by FM Nirmala Sitharaman last fortnight stressed upon the pace infrastructure development in India. This is reflected in the government decision to impose road and infra cess on petrol/diesel, which will help the government to mop up funds to invest in infrastructure projects. Infra companies are the logical beneficiary of higher spending in infrastructure. We had witnessed earlier in the year 2014 that infra funds were the best performing funds. Therefore, it is the right time to take exposure to infrastructure funds.L&T infrastructure (LTI) fund is one such fund that an investor can think of. One of the factors that favour this fund is its investment in infrastructure companies. Many infra funds tend to invest in any company that is in anyway related to infrastructure. Therefore, they even invest in banking companies as they finance infra companies. Hence, such funds are more like diversified funds, which are investing in infra proxies and hence their returns will not imitate the pure infra funds. In the case of (LTI), it invests in the companies that are directly connected to the infrastructure theme. If we check the portfolio of LTI, we find that it has the largest holding in the largest infra company in India. It holds 9.65 per cent of the total assets in Larsen & Toubro. Out of total assets, the fund has invested more than 60 per cent in companies from the construction and engineering sector. Besides sectors, if we look at the cap-wise allocation of the fund, it is well-poised for better returns, going ahead. It has equally distributed the fund's corpus in small-cap, mid-cap and large-cap stocks. Going ahead, as mid-cap and small-cap companies have underperformed in the last one and half year, they are likely to perform in the next one year.