Should you bet on Infrastructure Funds?

Should you bet on Infrastructure Funds?

by 5paisa Research Team Last Updated: Dec 11, 2022 - 07:04 am 43.5k Views
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Despite markets going through a rough phase, few pockets have done well than Nifty 50. Infrastructure sector is one of them. Read on to find out more.

In November 2021, even though the equity market (Nifty 50) fell close to 4%, various such pockets in the market outperformed Nifty 50 and one of them is infrastructure sector. Nifty Infrastructure index, though fetched negative returns, outperformed Nifty 50 by around two per cent.

Nifty Infrastructure index was in a bear phase from January 2008 to March 2009. Since then, it has never achieved its peak, but was consolidating in a range of 1,830 to 3,898 for almost 12 years. It was in February 2021 when Nifty Infrastructure index gave a breakout from consolidation and depicted some signs of recovery. Nifty Infrastructure index is almost 1,300 points or 25% away from its all-time high made January 2008.

To understand, whether you should consider investing in it or not, one needs to check its current valuation. If we look at the price to earnings (P/E) ratio and price to book (P/B) ratio, then as of today they stand at 17.78 and 2.94, respectively. On the other hand, its 10-year median P/E and P/B is 21.75 and 2.1, respectively. It seems that they are presently undervalued. Also, with the economy on the recovery mode, infrastructure sector seems to be well poised.

Following is the list of top five infrastructure funds.

Funds 

1-Year 

3-Year 

5-Year 

10-Year 

BOI AXA Manufacturing & Infrastructure Fund 

54.64 

26.20 

19.04 

14.60 

Invesco India Infrastructure Fund 

58.83 

25.82 

19.00 

17.17 

Tata Infrastructure Fund 

60.13 

21.84 

15.94 

14.31 

Kotak Infrastructure & Economic Reform Fund 

61.21 

20.62 

14.75 

15.37 

Canara Robeco Infrastructure Fund 

61.71 

21.32 

14.76 

14.80 

 

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