Developed infrastructure is one of the signature identities of the world’s top economies. India, with its impressive infrastructure growth in recent years, is on the way to becoming one of the top economies in the world. The proof: the evolving infrastructure landscape. We are witnessing transport expansion, energy systems shifting towards sustainability, and new facilities adorned with the latest technology that are also becoming the backbone of India’s economic growth.

So, why not make this sector a part of your portfolio?

One effective investment route is through infrastructure index funds. If your aim is to strengthen your portfolio, then this sector, packed with resilient growth potential, may help fortify your portfolio.

But first, what are infrastructure index funds?

Infrastructure investing through an index fund eliminates the need to pick individual stocks of companies. Through an index fund, investors get to invest in a slice of the infrastructure sector minus the hassle of stock-selection challenges. These funds track the performance of the chosen index, consisting of the infrastructure industries like transport, energy, utilities, etc. Since they track a specific benchmark index, investors can easily scrutinize the performance of the index’s constituents, providing a clearer picture about its investment universe.

Key reasons that infrastructure index funds can add potential strength to your portfolio

1. Opportunities in India’s growth vision

By 2047, India is expected to have intelligent infrastructure with extensive transport networks, digitally-enabled smart cities, sustainable practices, etc. This “Amrit Kaal Vision” brings incredible growth opportunities for investors, including many developments in the infrastructure sector. One practical way to be part of this vision is a long-term investment in infrastructure index funds.

2. Capitalizing on the infrastructure development

The Indian government’s focus on tapping into global trends to produce innovative solutions affirms the future growth potential of this sector. The infrastructure expansion through renewable energy initiatives, high-speed rail systems, and advancements in many construction projects can serve as wealth creation investment opportunities. Infrastructure index funds can offer an easy way to invest in these opportunities in a single investment.

3. Urbanization and population growth

Due to rapid urbanization and population growth, the demand for infrastructure will also increase, meaning more housing, more communication networks, more power consumption, etc. This can motivate the government to bring new projects that can boost infrastructure development.

4. Low-cost investments

Adding individual infrastructure stocks to your portfolio will bring higher investment related expenses. As infrastructure index funds follow a passive investment strategy, meaning these funds track their benchmark indices, they cash in lower entry costs, increasing the investment affordability.

5. Simplified diversification with key sectors

Infrastructure is a harmonized sector of energy, construction, transport, utilities, and other essential industries, which also captures the performance of the entire infrastructure sector.

A new NFO: Aditya Birla Sun Life BSE India Infrastructure Index Fund

Aditya Birla Sun Life BSE India Infrastructure Index Fund is the latest NFO offering from Aditya Birla Sun Life Mutual Fund, launching on November 14th, 2024. It invests in the equities of India’s key economic pillars like construction and engineering, energy, NBFCs (infra-focused), transportation, etc., with the investment bifurcation of 61% in large-caps, ~22% in mid-caps, and 17% in small caps. Its benchmark index is BSE India Infrastructure Total Return Index, an index focusing on the performance of the domestic infrastructure industry.

Read More: ABSL Infrastructure Index Fund NFO

[Disclaimer - Aditya Birla Sun Life BSE India Infrastructure Index Fund (“Scheme”) is based on the BSE India Infrastructure Total Return Index. BSE® is a registered trademark of BSE Limited. The Scheme is not sponsored, endorsed marketed or promoted by, BSE or their respective affiliates. Please refer to the Scheme Information Document for disclaimers w.r.t. BSE India Infrastructure Total Return Index.]

Important Note: Dividend payout from the gold fund will be taxed as income for the investor. No STT or Securities Transaction Tax is applicable when selling or buying units in gold funds.

Are you ready to invest?

Infrastructure index funds offer a low-cost investment option in a high-potential growth sector. Strengthening your portfolio with the addition of such funds can potentially boost the overall returns on investments. This could be your opportunity to participate in India’s Amrit Kaal vision of 2047. Align your portfolio with this vision by investing in infrastructure index funds.

Aditya Birla Sun Life AMC Limited/Aditya Birla Sun Life Mutual Fund is not guaranteeing/offering/communicating any indicative yield/returns on investments. Issuer(s) / Stock(s) and Sector(s) mentioned in the document are for the purpose of disclosure of the portfolio of the Scheme(s) and should not be construed as recommendation. The fund manager(s) may or may not choose to hold the stock mentioned, from time to time.

The article is intended for informational purposes only and does not imply any guarantee of returns or performance. Investors should consult their financial advisors if in doubt whether the product is suitable for them.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.