With the arrival of a stable government at the Centre, both institutional and retail investors have acquired the confidence to re-enter the markets. This has led to a substantial improvement in the mood and driven the Sensex up to the 14,000 level. The pronouncements of the new government have made it clear that infrastructure will a key thrust area during its tenure. Taking advantage of these circumstances, Reliance Mutual Fund, the fund house with the largest assets under management in the country, has launched an open-ended equity scheme — Reliance Infrastructure Fund.

The fund

Reliance Infrastructure Fund is a theme-based open-ended equity fund. It will invest 65-100 per of its assets in equity and equity-related instruments of companies engaged in infrastructure and infrastructure-related sectors, . These companies must be either incorporated in India or be India-focused in their activities. Around 0-35 per cent will be invested in debt and money-market securities.

Portfolio construction. A mix of large- and mid-cap stocks will make up the portfolio comprising 50 to 80 stocks. Both value and growth oriented stocks will be chosen.

Investment strategy. Infrastructure is a broad-based theme that gives the fund manager the leeway to invest in a range of sectors: airports, banks, cement, coal, construction, engineering, metals and minerals, ports, power and power equipment, roads and railways, telecommunication, transportation, mining, and so on.

Benchmark. BSE 100 has been chosen as the benchmark for this fund.

Fund manager. The fund manager is Sunil Singhania. Commenting on the timing of the issue, he says: “With the sharp upside moves within the market in the last two months, valuations have doubled but are significantly lower than in 2008, in some cases by nearly 60-70 per cent. The concerns related to political uncertainty are also over, and companies are now able to raise money through debt and equity.” Moreover, with interest rates plunging, he says, the returns from debt have come down and investors are once again looking towards equities for better returns.

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