Best Infrastructure Mutual Funds in India: Top Funds

Infrastructure has always been the backbone of a nation’s economic growth, shaping how people move, work, and build businesses.

When you step outside, you’ll probably see the indications of India’s fast development: modern airports are growing all over the nation, metro networks are growing through cities, and new highways are stretching across states. One of the most talked-about investment themes in the market today is infrastructure development, which is occurring at a rate never seen before.

If you want to grow your wealth over the next decade, finding the best infrastructure fund might be on your mind. Many investors often look for the top 5 infrastructure mutual funds India has to offer right now. In this blog, we will learn and understand how to pick the best infrastructure mutual funds for your portfolio.

What Are Infrastructure Mutual Funds?

Infrastructure mutual funds are special types of equity mutual funds, where the main objective is to invest the money of investors in the shares of companies that help build the country. As per the rules, these funds must put at least 80 percent of their money into infrastructure related businesses.

When you invest in these funds, you are buying a small piece of many different companies. The types of infrastructure companies these funds invest in are quite varied. They include:

• Construction and engineering companies that build roads and bridges.
• Energy companies that generate power and manage oil refineries.
• Material makers who produce cement and steel.
• Transport companies that manage shipping and airports.
• Telecom companies that set up mobile networks and data centers.

By investing in these funds, you are not just putting your funds in one company. You bet on the entire growth sector of India.

Top 10 Infrastructure Mutual Funds in India

Fund Name	NAV (in INR)	Fund Size (in INR Cr)	Expense Ratio (%)	No. of Stocks Holding
Quant Infrastructure Fund	39.08	2,790	0.83	38
Invesco India Infrastructure Fund	71.04	1,333	0.92	40
ICICI Prudential Infrastructure Fund	206.63	8,076	1.15	61
Bandhan Infrastructure Fund	54.14	1,428	0.94	67
Nippon India Power & Infra Fund	376.06	6,772	0.96	74
Canara Robeco Infrastructure Fund	184.33	878	1.03	45
DSP India T.I.G.E.R. Fund	351.93	5,184	0.80	69
Franklin Build India Fund	167.46	3,003	0.95	38
Kotak Infrastructure & Economic Reform	76.37	2,252	0.69	51
SBI Infrastructure Fund	51.82	4,545	1.04	36

Read Also: Top 10 High-Return Mutual Funds in India

1. Quant Infrastructure Fund

The fund’s main investment is in sectors related to construction, engineering, and power generation. Here the fund aims for high capital growth by dynamically changing its stock picks based on market trends. Major holdings of this fund includes Larsen & Toubro and Reliance Industries. Altogether this is a risky fund as the fund manager takes bold bets, which can lead to quick ups and downs in a short time span. 

Fund Name	1-Year Return (%)	3-Year Return (%)	5-Year Return (%)
Quant Infrastructure Fund	8.46	18.41	23.58

2. Invesco India Infrastructure Fund

In this fund the focus is on companies that have a strong business model and also have a good cash flow. Unlike others, this fund puts nearly half of its money into mid and small companies. The fund focuses on capital goods and electrical equipment companies. As there are mostly mid and small cap companies included in this fund, the risk is very high. However, it has delivered excellent long term returns in the past.

Fund Name	1-Year Return (%)	3-Year Return (%)	5-Year Return (%)
Invesco India Infrastructure Fund	12.67	22.95	20.94

3. ICICI Prudential Infrastructure Fund

This is one of the biggest funds in the infrastructure mutual funds sector. It looks for solid companies available at a fair price. It mainly invests in large and famous companies like NTPC and Interglobe Aviation. Focus of this fund is on companies related to the energy and construction sector. It is less volatile than funds that buy small companies, but it still carries high sectoral risk.

Fund Name	1-Year Return (%)	3-Year Return (%)	5-Year Return (%)
ICICI Prudential Infrastructure Fund	13.29	24.18	25.47

4. Bandhan Infrastructure Fund

This fund tries to find companies that will directly benefit from government spending in a specific infrastructure sector. This fund has a mix of both large and small companies in the market. Top sectors include capital goods and materials based companies. This fund comes under a very high risk profile. The fund looks for turnaround stories of companies which can take time to play out.

Fund Name	1-Year Return (%)	3-Year Return (%)	5-Year Return (%)
Bandhan Infrastructure Fund	9.40	23.43	20.37

5. Nippon India Power & Infra Fund

This fund revolves around the power sector. It wants to capture growth from electricity generation and traditional infrastructure companies. It invests deeply in the utilities and industries sector. Interestingly, this fund is a little stable and less fluctuating as compared to the general market. The fund has shown a great ability to balance risk and reward.

Fund Name	1-Year Return (%)	3-Year Return (%)	5-Year Return (%)
Nippon India Power & Infra Fund	18.12	25.56	23.27

6. Canara Robeco Infrastructure Fund

In this fund the investment is majorly made in market leading companies cumulatively. It looks for businesses with a unique advantage. About 61 percent of its money is put by the fund in large companies. The focus of this fund is on companies that deal in the power and heavy engineering sector. It is a high risk fund, but focusing on big companies helps protect your money when the market falls.

Fund Name	1-Year Return (%)	3-Year Return (%)	5-Year Return (%)
Canara Robeco Infrastructure Fund	21.33	26.18	24.30

7. DSP India T.I.G.E.R. Fund

TIGER stands for The Infrastructure Growth and Economic Reforms Fund. The fund focuses on companies that do structural changes in the country. The fund buys shares across all sizes of companies. It even invests in the healthcare and telecom sector, showing a modern view of infrastructure. It is a very high risk fund and wants the investors to stay invested for at least seven years to see the best results.

Fund Name	1-Year Return (%)	3-Year Return (%)	5-Year Return (%)
DSP India T.I.G.E.R. Fund	22.07	26.22	23.85

8. Franklin Build India Fund

This fund looks for sustainable businesses and avoids companies that only do well in specific short cycles. The main focus of the fund is on the energy sector and also holds strong positions in transport and industrials. It is known for managing risk very well as it limits downside losses better than many of its peers.

Fund Name	1-Year Return (%)	3-Year Return (%)	5-Year Return (%)
Franklin Build India Fund	20.66	28.00	24.09

9. Kotak Infrastructure and Economic Reform Fund

It aims to grow wealth by investing in companies that benefit from India’s economic development. It heavily invests in construction, telecom, and auto parts. The fund carries a very high risk rating. It also tries to capture value across many parts of the economy.

Fund Name	1-Year Return (%)	3-Year Return (%)	5-Year Return (%)
Kotak Infrastructure & Economic Reform	20.01	20.51	21.89

10. SBI Infrastructure Fund

It aims to provide steady long term growth by picking a concentrated basket of infrastructure stocks. The fund places big bets on energy and construction giants like Shree Cement and Bharti Airtel. This fund has shown a balanced approach as it protects your capital well during bad market phases.

Fund Name	1-Year Return (%)	3-Year Return (%)	5-Year Return (%)
SBI Infrastructure Fund	11.14	20.91	20.09

Read Also: Best Infrastructure Stocks in India

Why Invest in Infrastructure Mutual Funds?

1. India’s Infrastructure Growth Story: India is a developing country and growing at a fast pace. For this developing country people require more houses, faster trains, and larger data centers. For example, India’s data center capacity is expected to grow massively by 2030 because of new technologies like Artificial Intelligence. This means companies building these digital and physical assets will have a lot of work for many years.
2. Government Initiatives and Budgetary Support: The government is the biggest customer for infrastructure companies. Recently, the government increased its budget for infrastructure to over Rs.11 lakh crore. They have also launched plans like PM Gati Shakti to make sure projects finish on time without delays. This gives companies a clear path to make profits.
3. Sector Multiplier Effect on Broader Economy: You must have heard about the multiplier effect, the Reserve Bank of India shows that for every 1 rupee the government spends on infrastructure, the overall economy grows by 2.5 to 3.5 rupees. Building a road & bridges creates jobs and people with jobs tend to buy more goods. This helps the whole country grow, making infrastructure companies very valuable.
4. Long-Term Wealth Creation Potential: Companies that build airports or power plants face very little competition as it is too expensive for a new player to enter this sector with very less experience. Because of this, existing companies enjoy steady business and predictable cash flows. If you stay invested for a long time, these steady profits compound and create massive wealth for you.

Advantages of Investing in Infrastructure Mutual Funds

• Protection from Inflation: When prices of goods go up, infrastructure companies often increase their fees. For example, toll road prices go up with inflation. This protects your investment value.
• Clear Earnings: Infrastructure based companies often have long contracts with the government, investors can easily guess their future profits.
• Variety: Infrastructure based companies are not limited to cement companies. You are also investing in companies related to green energy, digital data centers, and telecom networks.

Read Also: Best Money Market Mutual Funds in India

Disadvantages of Investing in Infrastructure Mutual Funds

• Policy Delays: These projects need a lot of permissions and norms to be fulfilled If the government changes a rule or delays a permit, the company can lose money.
• Economic Cycles: If the economy slows down and interest rates go up, new construction projects are halted, which can severely hurt your fund returns.
• High Risk: Because the fund only invests in one theme, if the whole infrastructure sector performs poorly, your entire investment will drop in value.

How to Choose the Best Infrastructure Mutual Fund

1. Past Performance and Consistency: Investors shall always look for the fund’s past performance or how the fund performed over the last 3, 5, and 10 years. A good fund is one that consistently beats its benchmark index year after year.
2. Fund Size and Liquidity: Fund size is also called Assets Under Management or AUM. A very small fund might be risky for the investors and a very huge fund might struggle to buy and sell small company stocks quickly. A fund with a decent size that matches its strategy is the best choice.
3. Fund Manager Experience: Infrastructure is a complex sector which requires understanding of government policies and big bank loans. Choose a fund managed by someone who has been in the market for a long time and has seen the markets in depth.
4. Expense Ratio and Charges: This is the fee the mutual fund company charges you for managing your money. Even a small difference in fees can eat up your wealth over 10 years. Always try to pick funds with a lower expense ratio, also direct plans are cheaper than regular plans.
5. Investment Timeline: You cannot invest in infrastructure funds for just one or two years. These projects take years to complete. You should only invest in these funds if you have patience for at least 5 to 7 years.

Conclusion

To sum it up, the infrastructure sector in India offers a brilliant chance for long term investors. The country is developing and building its future, and the government is fully supporting this growth. By adding a good infrastructure mutual fund to your portfolio, you can be a part of this amazing journey.

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