Betting on the capital expenditure wave

FUND ANALYSIS/ UTI Infrastructure

The first of the infrastructure funds to be launched, UTI Infrastructure has generated phenomenal returns.

At the time of launch, the fund's focus was to ride on the big ticket capital spends in the country. In that sense, UTI spotted the opportunity at the right time and in the bargain became a trendsetter.

The fund found itself in the top quartile of the diversified equity category in 2005, generating 57 per cent returns to better an average peer by a margin of more than 10 percentage points. 2006 was even better, when the fund added to its glory by taking the top slot. Its returns of 61.48 per cent at the end of 2006 ranked it first in the category.

This year too, the fund has managed to stay ahead of the category, despite hitting a rough patch in the first quarter. Like many other infrastructure funds, UTI Infrastructure also burnt its fingers in the construction space, losing close to 9 per cent in the March 2007 quarter compared to the category's loss of (-) 5.93 per cent.

This superior performance has resulted in a large investor patronage, with the asset size shooting up from under Rs 60 crore at the time of its launch in April 2004 to Rs 1,176 crore at present.

As far as the sector allocation is concerned, the fund is not too adventurous and sticks to the large consensus sectors of basic/ engineering, construction and energy.

The fund is an interesting proposition for investors who want to bet on the capital expenditure wave sweeping the country.