Infrastructure is said to be the tangible aspects such as roads, railways, transportation, electricity and so on which are indispensible to the day to day functioning of an economy. The state of the infrastructure is instrumental in determining whether the economy is a developed or developing economy. Mutual Funds that invest in infrastructure sector or its ancillary companies that own manufacture and operate infrastructure assets or infrastructure projects are known as Infrastructure funds.
The companies invested in these sectors could be directly linked to infrastructure such a construction or production of capital goods or indirectly benefit from sectors like banking and metal. According to the Indian Planning Commission, there is no clear definition of infrastructure according to the usage of this term in our country. Most fund managers follow this definition and use their discretion while attributing stocks for the fund. The stocks could either be core infrastructure stocks or also include stocks of ancillary companies.
Therefore, we find that the investment universe is very large for Infrastructure funds and currently these funds are heavily tilted in their investments towards Sectors like, Auto & Auto ancillaries, Banking and Financial Services, Consumer cyclical, Telecom, Constructions and project and Petroleum and Gas.