Canara Robeco Infrastructure Fund: A good sectoral fund for long term investors

Infrastructure is crucial for India Growth Story

Infrastructure is one of the most crucial sectors in the progress of a country. Given India’s aspiration to become a developed economy by 2047, infrastructure development is crucial in achieving that vision. The Government recognizes the infrastructural needs and has developed various and policies in this regard. The National Infrastructure Pipeline (NIP), introduced in 2019 emphasizes social and infrastructure projects including energy, roads, railways, and urban development projects worth Rs 102 lakh crores (source: National Investment Promotion and Facilitation Agency, Government of India).Some of the major polices and schemes announced by the Government to boost infrastructure are setting up Rs 20,000 crores National Investment and Infrastructure Fund (NIIF), the National Infrastructure Pipeline, PM Gati Shakti Master Plan, National Logistics Policy, RCS-UDAN, Sagarmala, Bharatmala, Digital India scheme, Telecom Technology Development Fund, and PLI.

Private Sector Capex spending is required to drive infrastructure growth

In the Union Budget 2023-24, the government emphasized the need for increased spending in the infrastructure sector and nearly trebled its infrastructure spending to 3.3% of GDP compared to its spending in 2019-20. However, Government spending needs to be supplemented by private sector capex spending. With improving balance sheets (lower debt to equity ratios) and lower interest rates in the near to medium term, the time is ripe for private sector capex spending. With impetus of Government spending and potential private sector, infrastructure sector companies are likely to play a key role in the India Growth Story.

Infrastructure Sector has outperformed the broad market

The infrastructure sector has outperformed the broad market since the economy was opened up after the COVID-19 pandemic in 2020-21 (see the chart below). Government spending on the infrastructure sector since the 2021 Union Budget has benefitted the stocks in this sector and this has in turn helped them in outperforming the market.

Source: National Stock Exchange, mutualfundtools.com, as on 30^th November 2023

Internal factors for infrastructure growth

Source: Canara Robeco MF

About Canara Robeco Infrastructure Fund

Canara Robeco Infrastructure Fund was launched in December 2005. The fund has given 13.9% returns since inception (as on 30t^th November 2023). The chart below shows the 1, 3, 5 years and since inception CAGR returns of the fund versus the broad market Index. You can see that the fund has generated alphas for investors relative to the broad market index. Vishal Mishra and Shridatta Bhandwaldar are the fund managers of this scheme.

Source: Canara Robeco Fund Factsheet, Advisorkhoj Research, as on 30^th November 2023

Consistent track record of alpha creation over long investment tenures

The chart below shows the 5 year rolling returns of Canara Robeco Infrastructure Fund (rolled daily) versus its benchmark index S&P BSE Infrastructure TRI. You can see that the fund consistently beat its benchmark over 5 year investment tenures across different market conditions / investment cycles. We must emphasize here that infrastructure is long term play, unlike some other sectoral plays. You must have long investment horizons for infrastructure funds.

Source: Advisorkhoj Research, as on 30^th November 2023

Wealth creation through SIP

Many investors plan on timing the market with sectoral or thematic funds. However, we think that infrastructure is a long term play since it is integral to the India Growth Story and our journey to becoming a developed country. The chart below shows the growth of Rs 10,000 monthly SIP Canara Robeco Infrastructure Fund since the inception of the scheme. With a cumulative investment of Rs 21.80 lakhs, you could have accumulated a corpus of more than Rs 98 lakhs (as on 10^th January 2024) over the last 18 years or so. The XIRR return of the fund has been around 15%.

Source: Advisorkhoj Research, as on 30^th November 2023

Investment Strategy

• Invests in Companies which directly or indirectly participate in India’s Infra Story


• Follows a theme based Investment Approach which lends superior flexibility in fund management over a Sector based Investment Approach


• Identified Megatrends - Surface Transport & Logistics and Urbanisation which are likely to be growth drivers


• Concentrated Portfolio with a Large cap bias

Portfolio Construction

The Fund invests in Growth Oriented Companies and companies which are ‘Market leaders’ or businesses with ‘Unique Business Proposition’. It excludes companies like heavy asset owners, companies with high leverage and those with over ambitious management.

Source: Advisorkhoj Research, as on 30^th November 2023

Role of sectoral / thematic funds in investment planning

When you are planning to build an equity portfolio, you can think two components in your portfolio – a core portfolio and a satellite portfolio. Diversified equity funds are best suited to be part of your core portfolio. In addition to the core portfolio, you can also have a satellite portfolio where you can take relatively higher risks to get higher returns. Sectoral and thematic funds can be part of your satellite. Different sectors or investment themes perform varyingly across market/economic phases. Sectoral or thematic funds provide the opportunity of getting higher returns than the broad market and boost your overall portfolio returns.

Why invest in Canara Robeco Infrastructure Fund?

• Opportunity to participate in ‘India Growth Story’


• Canara Robeco Infrastructure Fund is a dedicated Infrastructure fund, that invests in ‘Market leaders’ or businesses with ‘unique business proposition’


• The fund is positioned to tap businesses which are expected to gain multifold with the implementation of the government’s reforms


• Canara Robeco Infrastructure Fund is less riskier than sector funds as Infrastructure covers various industries – it is relatively more diversified than other single industry specific funds

Who should invest in Canara Robeco Infrastructure Fund?

• Investors willing to have Tactical Allocation to overall equity portfolio


• Investors looking for capital appreciation over long investment tenures from infrastructure theme


• Investors with very high risk appetites


• Investors with minimum 5 year investment tenures


• You can invest either in lump sum and SIP depending on your investment needs.

Investors should consult with their financial advisors or mutual fund distributors if Canara Robeco Infrastructure Fund is suitable for their investment needs.