BOI AXA Focused Infrastructure Fund: Apt for risk takers

BOI AXA Focused Infrastructure Fund is an Open Ended Equity Scheme with an investment objective of generating long-term capital appreciation through a portfolio of predominantly equity and equity-related securities of companies engaged in infrastructure and infrastructure-related sectors.

Nature: Equity-oriented open-ended Inception: March 2010 Assets under management:  Rs 17 crore at the end of September 2012 Fund Manager: Gaurav Kapur Analysis ·         This is an infrastructure focused fund and it had the highest exposure to energy at 31 per cent of the portfolio at the end of May 2011. Metals, industrial manufacturing and construction were some of the other sectors that had a high exposure in the portfolio.  Reliance Industries was the top individual holding in the portfolio followed by HDFC, Bharti Airtel, L&T and Power Grid Corporation. More than 8 per cent of the portfolio was present in cash and cash equivalents.  The fund had a high turnover ratio of nearly 2.5 times and it was an underperformer over the benchmark BSE 100 index over the one year period and since its inception.

 

·         Six months later the share of energy in the portfolio had gone up to 45 per cent followed by telecom, metals and industrial manufacturing.  The portfolio turnover ratio dropped sharply to 1.3 times.  Bharti Airtel was the top individual holding with a 10 per cent share in the portfolio followed by Reliance Industries, L&T, NTPC, Indraprashtha Gas, HDFC and BHEL.   The fund remained an underperformer over the one and two year time periods ending September 2011.

 

·         At the end of May 2012 energy continued to be the dominant sector in the portfolio and this had an exposure of 37 per cent.  Metals and financial services were two other sectors that also had a significant exposure and the portfolio turnover ratio dropped below the 1 mark.  HDFC was now the top individual holding with a 9 per cent share followed by L&T, Reliance Industries, ONGC, NTPC and Coal India.  The cash and cash equivalents had climbed slightly to be over the 8 per cent mark.  The fund remained an underperformer over the one and two year time periods ending March 2012.

 

·         There was a change that was being witnessed in the portfolio as the exposure to energy dropped below the 30 per cent mark at the end of November 2012.  Financial services saw an increase and this was now 20 per cent of the portfolio followed by metal, construction and cement.  HDFC was the top individual holding with a 10 per cent share but L&T was not far behind. Some of the other companies with a high exposure included Bharti Airtel, NTPC, ONGC, Power Grid and Coal India. The cash and cash equivalents in the portfolio had a nominal share and the portfolio turnover ratio was around 1 times. The fund had a new benchmark in the form of CNX Infrastructure index from August 2012 and it was an outperformer over the one, two year time periods and since inception.

 

·         Due to its very nature this is a fund suitable for risk taking investors and it has shown an improvement in its performance in recent times. This makes it worth considering only for investors who want an exposure to the infrastructure sector, have an outlook for 3 years or more and are willing to take a higher amount of risk.