Principal PNB launches core sector fund

Principal PNB Asset Management, one of the top 12 asset management companies in the country, has become the latest fund to jump on the infrastructure fund bandwagon. The fund has launched a services-cum-infrastructure fund on Monday.

"We have reached the end of the era of PE re-rating. From here, we are only likely to see the markets tracking the earnings of the companies which we expect to be in the region of 15-17 per cent a year," Shyam Bhat, assistant vice-president - investing, said.

While expressing optimism about the market being able to hold on to its gains through the year, Bhat warned of "intermittent" corrections due to the high exposure of the markets to institutional investors, especially foreign funds. He advised investors not to expect the index to maintain its growth momentum.

The Fortune 200 Principal, which entered the Indian market through a tie-up with PNB and Vijaya Bank five years ago, has seen its AUM (assets under management) going up from around Rs 550 crore in 2000 to Rs 7,000 crore last year.

The fund believes that the current rally in capital goods and other infrastructure stocks, such as Siemens, is likely to stay for the next two to three years.

"We believe that India cannot keep up its current growth rate of 6-8 per cent without investing in its infrastructure. This awareness about this is seen increasing over the past six months," Bhat said.

Besides capital goods, other sectors that have been identified as high growth areas are commercial-auto (trucks), telecom equipment, metals, cement and construction.

While the fund will be betting on the above sectors, it will also hold between 25 per cent and 75 per cent of its assets in service sectors such as hospitality, travel, banking and finance and IT. Offer period for the fund is from January 9 to 31.