Friday, June 26, 2009


Reliance Infrastructure NFO - A Small Exposure is recommended

Srikanth Shankar Matrubai

Reliance Mutual Fund, India's Biggest AMC in terms of Assets Under Management, has launched its 18th Equity Fund, Reliance Infrastructure Fund.
Investment Objective
The Fund seeks to generate Long Term Capital Appreciation by investing predominantly in Infrastructure and its related Sectors. The Fund has the option of investing upto 35% of its Corpus in Debt and Money Market Securities.
Fund Manager :
The Fund will be managed by Sunil singhania, who has been with Reliance Mutual Fund for more than 5 years now. He has sucessfully managed funds like Reliance Growth, Reliance Equity, Reliance Diversified Power Sector, Reliance Banking Fund among others.
Benchmark : BSE100
Minimum Application Amount : 5000 and in multiples of Rs.1
Minimum Application Amount : Rs.100 and in multiples of Rs.1

Infrastructure Sector looks Attractive :
With the Second Highest GDP Growth rate in the World and a consistent growth rate of 8%, India Infrastructure is poised for a Gaint Leap.
Rising Disposable Income leads to demand for closing the Infrastructure Gap.
The New UPA Government has made all the right noises and moves to kickstart Infrastructure projects. A Dramatic increase in Public Private Participation (PPP) is expected due to favourable policies by the New Govt. All this, along with easy liquidity is sure to result in significant Inflows into the Infrastructue Sector.

Recommendation :
I am never in favour of any Sector specific fund. But with its excellent performance in related Sector Fund, Reliance Diversified Power Sector Fund,( where the Fund Manager, Mr.Sunil Singhania has shown his nimble-footedness by responding quickly to near term events even while holding to Blue Chips with Long Term Outperformance Promise, ) inspires confidence in the Fund.
The Primary point in FAVOUR of the Fund is that the Fund has the mandate to invest not just in Infrastructure Sector but also in Sub Sectors related to Infrastructure like Power, Telecom, Roads, Railways, Ports, etc. This covers more than 50% of its Benchmark, BSE 100. Reliance Infrastructure Fund is not a Hard-Core Infrastructure Fund.
Also the fact that valuations are attractive in the Infrastructure sector, inspite of recent spurt and investing in a phased manner during the construction period of the portfolio would be beneficial.
Do invest moderately and through sips.
Most importantly, do not forget to regularly track the fund and make appropriate changes, if required.

Caveat :
Sector Funds tend to be very volatile. In case of a Downturn in Infrastructure Sector, the risk of holding onto this Fund is higher than holding on to a Equity Diversified Fund. This Fund, thus, is recommended for those who can understand the Infrasturcture Sector very well and have a appetite for volatility. For those who can't, there are plenty of other investment opportunities.
Remember, Infrastructure Sector looks highly attractive and you need to have at least 1 Infrastructure fund in your portfolio to add that extra spice to your portfolio. Maybe not Reliance Infra, but One Infrastructure Fund is recommended especially for those with a good risk appepite.

Best of luck,
srikanth shankar Matrubai

Also visit

No comments:

Post a Comment

Have you read the best seller DON'T RETIRE RICH ?

The MOST Loved book on How NOT TO RETIRE RICH! 4.8 out of 5 stars Order your copy NOW !