NFO Insight: Motilal Oswal Infrastructure Fund opens. Time to add to your MF mix?
Motilal Oswal Mutual Fund
's latest
new fund offer
of
Motilal Oswal Infrastructure Fund
is open for subscription and will close on May 7. The fund is an open-ended equity scheme following infrastructure themes.
The scheme will open for continuous sale and repurchase on May 19. The investment objective of the scheme is to achieve long term capital appreciation by predominantly investing in equity and equity related instruments of companies that are engaged directly or indirectly or are expected to benefit from the growth and development of the infrastructure sector in India.
Some of the Infra Sectors are as follows: Airports, Cement & Cement Products, Construction & construction related industries (incl. consumer durables related to construction industries e.g. Ceramics, Glass, Granite etc.), Electrical & Electronic Components, Engineering, Energy, Capital Goods & Products, Metals & Minerals, Ports, Power and Power equipment, Road & Railway related infrastructure companies, Telecommunication, Transportation, Housing & Commercial Infrastructure, Internet towers, Oil and Oil Related Sectors. Any other sector directly or indirectly related to infrastructure creation/development in the Indian economy.
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Why this fund now?
According to MOAMCs internal research, Government Spending is budgeted to increase by 7.4% in FY26BE and 6.1% year-on-year (YOY) in FY25RE. While, the Capital Spending is budgeted to rise by 22.1% of total government spending in FY26BE. To facilitate this infrastructure development, the Government has increased its allocation in the infrastructure sector to Rs 111 lakh crores in FY20-25 compared to Rs 57 lakh crores in FY13-19.
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India's infrastructure landscape is undergoing significant changes, influenced by government reforms, steady GDP growth of over 7%, and increased capital expenditure across key sectors including Roads (~17x), Railways (~6.5x), Housing (~7x), and Defence (~3x).
Experts take on new launch
Experts typically ask investors to avoid investing in NFOs unless they offer something unique. The uniqueness could be that the scheme is offering an investment option that is not available in the market or offering something extra to an existing option. Otherwise, the experts believe investors are better off with an existing scheme with a long performance record. This is because you have some historical data to base your investment decision. You don't have any data when it comes to new offerings.
According to an expert, investing in new fund offerings should be avoided primarily because they do not have any past performance to speak of.
'Investing in lumpsum in an equity fund can also be very risky. Investors can consider entering after a track record is built, preferably through systematic investments that apply to their risk-taking ability,' according to Rajesh Minocha, a Certified Financial Planner (CFP), Founder of Financial Radiance.
Another expert shares a similar opinion. He mentions that it is not recommended to invest in NFOs as they are new to the market and have not undergone different market cycles to understand fund's agility across market cycles.
Additionally, the sectoral/thematic category is not recommended as they undergo cyclical performance, so investors are required to take tactical entry & exit to ride the performance which is not suitable for regular investors, commented Chirag Muni, Executive Director, Anand Rathi Wealth Limited.
The scheme is benchmarked against
Nifty Infrastructure
Total Return Index and is managed by Ajay Khandelwal, Atul Mehra, Bhalchandra Shinde, Rakesh Shetty, and Sunil Sawant.
For lumpsum, the minimum application amount is Rs 500 and in multiples of Re 1 thereafter. For monthly SIP, the minimum application amount is Rs 500 and in multiples of Re 1 thereafter with minimum 12 instalments.
CEO comment on the fund launch
"India's infrastructure growth is gaining momentum. Motilal Oswal Infrastructure Fund provides investors an opportunity to participate directly in this transformation across the infrastructure sector, aiming for long-term value. As capital expenditure picks up across sectors like roads, railways, energy, urban, social and digital infrastructure, we believe this fund offers a compelling opportunity to participate in India's infrastructure development journey,' said Prateek Agrawal, MD & CEO, Motilal Oswal Asset Management Company.
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Around 80-100% in equity and equity related instruments of companies that are engaged in or are expected to benefit from the growth and development of the infrastructure sector in India, 0-10% in equity and equity related instruments of other companies, 0-20% in debt and money market instruments (including cash and cash equivalents), 0-10% in units of REITs and InvITS, and 0-5% in units of mutual funds.
An exit load of 1% is applicable, if redeemed within 3 months from the day of allotment. The exit load will be nil, if redeemed after 3 months from the date of allotment.
The portfolio will essentially follow MOAMC's QGLP philosophy – i.e. invest in Quality businesses with reasonable Growth potential and with sufficient Longevity of that growth potential at a fair Price.
The scheme shall follow an active investment style and will seek to invest in companies with a strong competitive position or economic moat, good business prospects, run by a competent management that will help them achieve good growth over the medium to long term and are available at reasonable valuations.
How the infra index performed?
In the last three and five years,
BSE India Infrastructure
Index gained 24.06% and 36.40% respectively. Nifty Infrastructure Index surged by 18.65% and 26.99% in the last three and five years respectively.
In the last nine months,
BSE India
Infrastructure Index and Nifty Infrastructure Index went down by 18.24% and 5.15% respectively. In the last six months also, the indices dropped by 9.14% and 2.77% respectively. The indices have started to show some momentum in the last three and one months. The BSE India Infrastructure Index and Nifty Infrastructure Index were in the green zone in the last one and three months.
According to Minocha, BSE India Infra - TRI and Nifty Infra - TRI have seen strong 3-year and 5-year performance but turned volatile in the medium term. This is the cyclical nature of infrastructure, or for that matter, any sector fund. For most investors, it is best to go mainly with diversified funds like flexi-cap or multi-cap, where fund managers navigate sector allocation, he adds.
In recent years, the infrastructure sector has been one of the top performers and has delivered strong performance among peers driven by growing earnings and government capital expenditure on the infrastructure projects is what Chirag mentioned.
He further comments that however in the last six months it has delivered negative returns mainly due to broader market fall across the categories and sectors.
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Fund manager speak
"India is on the cusp of a major infrastructure transformation — from improved roads and railways to power, ports, and digital connectivity, supporting the country's manufacturing ecosystem and global integration. This fund aims to provide retail with exposure to companies involved in infrastructure and related sectors. We aim to create a well-diversified portfolio that taps into long-term opportunities while staying mindful of risks, with the goal of delivering steady value over time," commented Bhalachandra Shinde, Associate Fund Manager, Motilal Oswal Mutual Fund.
Apart from Motilal Oswal Infrastructure Fund, there are 18 other funds in the category and have a track record of three years in the market. In the last three years, HDFC Infrastructure Fund gave the highest return of 28.44%, followed by ICICI Pru Infrastructure Fund which gave 27.98% return in the same period.
Quant Infrastructure Fund
and
Taurus Infrastructure Fund
gave the lowest return of 17.01% and 16.26% respectively in the last three years.
Way ahead for infrastructure sector
After a mixed performance over the horizons, Minocha is of the opinion that India's infrastructure sector holds significant promise for the long term, and rising export demand and favorable policy measures have facilitated this growth.
'There is a high level of volatility in sector funds, which really can be treated as a satellite holding; timing plays an important role here. Most investors must weigh their approach cautiously and devote attention to diversified equity funds based on their asset allocation, goals, risk taking appetite and time horizon for those investments,' he added.
On the other hand, the expert from Anand Rathi Wealth shares that they are expecting strong growth in the infrastructure sector in the coming years which is mainly driven by government capital expenditure on infrastructure projects and growing private capex.
He further advises investors not to invest in any single sector rather invest across active diversified equity categories which gives exposure across the sectors and market caps and helps to ride all market cycles and also helps to generate additional alpha.
One should always invest based on their risk appetite, investment horizon, and goals.
(
Disclaimer
: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on
ETMFqueries@timesinternet.in
alongwith your age, risk profile, and Twitter handle.
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