HDFC Mutual Fund has launched a 3 year close-ended equity scheme, HDFC Infrastructure Fund.
Investment Objective
The investment objective is to seek long term capital appreciation by investing predominantly in equity & equity related securities of companies engaged in or expected to benefit from the growth and development of infrastructure.
Investment Strategy
The scheme shall invest into Infrastructure and related sectors as identified by the Fund Manager. For Eg. Engineering and Construction, Infrastructure asset owners and Banks etc. The scheme may also invest upto 35% of the fund in non-infrastructure related companies. The Scheme shall invest across all market capitalization. The balance, if any, shall be invested in debt securities and money market instruments.
Why Infrastructure at this time?
- Indian economy has recorded a growth of 8%+ over the past four consecutive years and is expected to maintain the same growth momentum in the future.
- To sustain high growth rate there is an urgent requirement for substantial investments in the country’s underlying infrastructure sector.
- As a result of capacity constraints certain segments of the sector are already facing significant challenges. Government is actively emphasizing the need for faster infrastructure build up by taking into consideration both the public & private sector participation.
- In order to attain sustained economic prosperity it is necessary for the government to remove existing bottlenecks that hampers the growth of the industry. Government is doing so by encouraging public – private participation & also by encouraging investments in roads, ports, airports, electricity etc.
- As compared to china – India’s spending on infrastructure sector as a share of
- At present government is aiding fast project approvals and implementation. Government is showing urgency to ensure commercial viability and visibility across sectors.
- Private sector has realized the size and economical potentiality of the opportunity and hence is eager to participate in the sector. The momentum of private participation is picking up with developments of emerging financing concepts like ‘Public Private Partnerships’ and ‘Viability Gap Funding’ taking root.
Key Advantages
- The fund will give an opportunity to invest in the growing infrastructure sector.
- Theme based focus – not sector based and hence provides flexibility to the fund manager.
- Closed ended format is preferable for thematic funds – as in an open ended scheme inflows to the fund tends to increase when the sector/ theme is at its peak.
Scheme Features
- Asset Allocation:
- Equity & Equity related Securities of infrastructure/ infrastructure related companies: 65–100%
- Equity & Equity related Securities of companies other than that mentioned above: 0–35%
- Money Market Instruments/Debt including Securitized Debt:0-35%
- Investment Options: Growth & Dividend (payout & reinvestment). – Dividend Reinvestment will be only after the scheme is converted into an open ended scheme upon maturity.
- Benchmark Index: S&P CNX 500.
- Minimum Investment amount: Rs 5000/- and in multiples of Rs.5000/- thereafter.
- Minimum Application Amount: Rs 5000/- and Rs. 100/- thereafter.
- Liquidity: Monthly – 1st two business days of each calendar month.
- Load Details:
- Entry Load: Nil.
- Exit Load: Nil.
NFO opens on January 8th 2008
NFO closes on February 21st 2008
Investment Rationale
- The fund aims to build a diversified portfolio with an objective to cover the sectors benefiting from Infrastructure development in India – High growth portfolio
- It will primarily target the Engineering & Construction, Infrastructure asset owners and Banks as these are poised for high growth – An edge to the portfolio
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