Cup of ‘wows’ overflows...

IIPM, GURGAON

...as infrastructure tops the charts

The flavour of the season is ‘core sector funds’. Fund houses seem to have made infrastructure their theme, with Lotus and Kotak AMC et al, planning to launch various core-sector funds. And with the sector growing at 8-9% per annum, on the back of the country’s increasing lust for quality infrastructure – ports, highways & airports – the optimism is not unjustified. When contacted, Tridib Pathak, CIO, Lotus India AMC, said, “We are planning for an infrastructure fund in the next 3-4 months, which will invest in a portfolio that is predominantly constituted of equity and equity related instruments of companies involved directly or indirectly in infrastructure creation in the economy.”

No doubt, this is a result of the extraordinary performance of infrastructure stocks in 2006 and in the first seven months of this calendar year. DSP Merrill Lynch, ICICI Prudential and UTI Mutual Fund already have presence in this sector through their respective funds. S. Naren, Senior Vice President & Head of Equities, ICICI Prudential AMC, whose infrastructure fund has registered a CAGR of about 64.52% in the past one year opines, “The growth in the sector itself is behind the fund’s outstanding performance. Infrastructure is acatalyst in growth and is bound to observe a promising trend, which adds to the fund’s performance.”

According to the Economic Survey 2006–07, investments of $320 billion would be required in the infrastructure sector during the 11th Five Year Plan. No doubt, infrastructure has substantial upside potential. Given the importance given to infrastructure creation, with impetus not only from the government, but also from public private partnerships, private entrepreneurial interest and foreign direct investment, the focus on infrastructure development is at an all time high. Companies, involved in this infrastructure creation process, are going to be biggest beneficiaries of the boom. So time to catch the bus on the infrastructure buzz? 4Ps

Edit bureau: Sunanda Roy

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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