L&T Infrastructure Fund is easily one of the best in its category as it has continued to perform well over the years. In this L&T Infrastructure Fund Review, we explore if this fund is suitable for investment.

Infrastructure funds are the type of funds where investments are made in stocks of companies which are directly or indirectly involved in the infrastructure sector or development of infrastructure in India.

Read more: What are Sector Funds?

L&T Infrastructure Fund Review

L&T infrastructure fund is an Infrastructure Mutual Fund which generates capital appreciation by investing in equity and equity related instruments of companies in the infrastructure sector and has potential to benefit from the increased spending in the infrastructure growth.

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The companies which are doing business in industries such as cement, real estate, energy, power, metals, etc are included in the infrastructure sector.

Also, the companies that are part of industries such as finance, banking, and transportation are also part of infrastructure sector as they are contributing indirectly to the infrastructure development.

It has provided considerable higher returns over the period and has outperformed the industry benchmark. In the last 1 year, this fund has grown by 37% approximately. Groww has rated 5 stars for this mutual fund.

L&T Infrastructure Fund Details

AUM ₹1515 Cr
NAV ₹18.38
Expense Ratio 2.14%
Minimum SIP ₹500
Return 1Y 36.30%
Return 3Y 19.39%
Return 5Y 23.96%

L&T Infrastructure Fund Manager

The fund was launched in the year 2007 and is currently managed by Soumendra Nath Lahiri. Mr. Lahiri is a B.Tech and PGDM from IIM Bangalore. Prior to joining L&T Mutual Fund, he has worked with DSP BlackRock Investment Managers Pvt Ltd. and Fortuna Capital.

Composition

Its composition is primarily equity (88.1% approximately) and the balance is invested in other instruments. Since its inception, this fund focused primarily on all types of market cap funds but over the time it has changed its composition among large, small and mid-cap funds.

The fund currently invests 23.1% of its capital in large-cap funds, 39.7% in mid-cap funds and rest 36.9% in small-cap funds. However, the fund claims to maintain the balance between all these market cap categories.

This fund is known for its diverse portfolio. Similar to the most of the infrastructure funds, it has its fund invested in the construction sector at a weight of 25.02%.

Industrial manufacturing sector comprises of 31.2% of the fund and cement and cement products form 16.6% of the composition of the fund. Other sectors in which this fund is invested in are telecom sector (13.2%), energy (6.2%), metals (5.4%), etc.

L&T Infrastructure Fund Performance

L&T Infrastructure fund has shown really well performance over the short term and medium period of time. Its annual returns are 37%, 20% and 24% over the past 1, 3 and 5 years respectively.

Why Infrastructure Fund?

  • India is expected to grow in the infrastructure sector as it has not realized its full potential in this sector.
  • The government has started many policies and structural reforms in this sector.
  • The rank of India has improved from 130 to 100 in ease of doing business due to the reforms in the country.
  • 100% FDI under automatic route is permitted in the construction sector for cities and townships.
  • Indian economy is opening up and promoting the investments through various policies in this sector.
  • All these above-mentioned factors have created a positive outlook for growth in the infrastructure sector.

Risks

The fund has invested majority in mid cap and small cap funds and thus maintains a good risk spread. Also, investment in mid cap and small cap ensures growth outlook for the fund.

The risk of this fund is lower in comparison to its industry benchmark Nifty Infrastructure. It has given considerably higher returns relative to the benchmark index.

The world is moving towards sustainability and environment-friendly practices, and hence government is planning to tighten reforms in this sector.

Real Estate Regulation and Development Act (RERA)  was a recent reform in the real estate sector.

All these may affect the performance of the fund. Therefore, there are political and regulation risks associated with this sector.

Charges

  • Exit: The fund has an exit load of 1% for redemption within 365 days.
  • Expense Ratio: The fund has an expense ratio of 2.14%.

When to Enter?

The right time to enter the market is the job of the fund manager. The investor just needs to decide the fund and amount he wants to invest. Ideally, you should use SIP to invest. If you want to invest lump sum, opt for STP.

Read More: What is STP?

When to Exit?

You can withdraw your money when your goals are achieved. Do not panic and withdraw money due to market fluctuations.

Tax Implications:

They are taxed as equity mutual funds. So, they attract a tax of 15% if the investment is redeemed before a year and 10% per annum after a year.

Read More: Tax on Mutual Funds.

How to Invest in L&T Infrastructure Fund?

L&T Infrastructure Fund is available for investment on Groww. Simply log in to your account, choose the fund- L&T Infrastructure Fund – make payment and start your SIP!

Happy Investing!

Disclaimer: the views expressed here are those of the author. Mutual funds are subject to market risks. Please read the offer document before investing.