The Hindu Business Line : Infrastructure funds spreading far and wide

Kolkata May 25 With more money flowing into infrastructure funds, fund managers' hunt for stocks spans the entire listed universe, far beyond predictable domains like commodities, power and capital goods.

It is now spread over the whole gamut, including logistics, ITES, hotels, financial services and more.

Funds bearing the `infrastructure' tag - SBI MF is the latest to join the league with a close-ended product - are now coming into their own, prompting the players concerned to search for stocks from across industries even more.

Fund circles are of the view that these products derive strength from the overall growth of the economy. The fortunes of the sectors these invest in are linked to the country's GDP growth. Spending on infrastructure, largely directed by the Government but often led by the private sector, impact earnings of a wide range of companies, some of which are worth including in portfolios.

Some of the tell-tale segments that these funds are invested in at the moment are oil & gas, heavy engineering, metals and capital goods. However, included also are the likes of banking, telecommunications, hospitality and construction.

UTI Infrastructure Fund (formerly Basic Industries Fund), which managed over Rs 800 crore at the end of the last quarter, had about 30 stocks in its portfolio, representing diverse sectors such as telecom, construction, wind energy and textiles. ICICI Prudential Infrastructure Fund, which had about Rs 1,580 crore under management in March, had, inter alia, stocks representing transportation, dredging and hotels.

As things stand, there are fewer than 10 funds openly making up the infrastructure genre; a select few (like DSP Merrill Lynch MF's TIGER Fund) also derive their names from this particular identity.

Sources, incidentally, point out that the last Union Budget had referred to allowing MFs to bring out infrastructure funds, following which the securities regulator had established a committee.

The latter, as SEBI had stated, comprised fund industry representatives - Mr U.K. Sinha, CMD, UTI MF (as the head of the panel), and Mr Milind Barve and Mr S. Naganath, respectively the chiefs of HDFC MF and DSP Merrill Lynch MF.

Mr Sanjay Sinha, designated CIO, SBI MF, feels infrastructure funds need to locate opportunities from all vital sections of the economy, without getting restrained by only a few select ones. "Infrastructure spending will remain a growth driver and there will be both direct and indirect impact. Also, there is need to diversify within the given framework and definition," he said, adding that there should be no market cap bias either for products such as these.

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