Sucheta Dalal :Will Bharti AXA’ Focused Infrastructure Fund’ make the cut?
Sucheta Dalal

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Will Bharti AXA’ Focused Infrastructure Fund’ make the cut?   

January 22, 2010

Bharti AXA Investment Managers has launched the ‘Bharti AXA Focused Infrastructure Fund’ which would mainly have exposure to sectors identified as pure infrastructure like cement, construction, energy, metals and financial services primarily engaged in financing infrastructure projects.

However, the fact remains that of the total 20 infrastructure funds in the market, 12 have underperformed, while eight funds have outperformed since inception. Of these 20 funds, seven funds have been benchmarked against the BSE 100 out of which five have underperformed and the remaining two have outperformed. The net asset values of the funds benchmarked under BSE 100 have given an average return of 6% whereas BSE 100 has gained an average 8%. Bharti AXA’s scheme is an open-ended equity fund and the investment performance of the fund will be benchmarked against the BSE 100 index. The NFO (new fund offer) opened yesterday and closes on 15 February 2010.

The fund has put out detailed analysis of how the BSE 100 index has done over the past three years, when you count only the infrastructue stocks. “Our internal research has indicated that core infrastructure stocks amongst the companies forming the BSE 100 index have outperformed the BSE 100 index by 19% CAGR over a period of three years. By having a focused portfolio of such sectors, we expect to derive the best for our investors through this fund,” said Prateek Agrawal, head (equity), Bharti AXA Investment Managers.

However, this reasoning is not relevant because Bharti AXA is not offering an infrastructure index fund. It is offering an actively managed fund—and we have seen 60% of the actively managed funds have underperformed their simple benchmarks. If they are compared to the adjusted index of BSE 100, the underperformance will be even more glaring.

One interesting aspect of the fund is that unlike the schemes of ICICI Prudential Infrastructure Fund and SBI Infrastructure Fund, this fund will not have any exposure to sectors like automobiles, chemicals, IT, consumer goods, media, paper, pharmacy and textiles. The scheme offers regular and quarterly dividend options having options of dividend reinvestment and payout facilities. Bharti AXA has a total of Rs600 crore assets under management (AUM). Of the total AUM, Rs150 crore is invested in equity and the balance in debt. Bharti AXA Life Insurance is a joint venture between Bharti, with interests in telecom, agri-business and retail, and AXA of France. Bharti holds a 74% stake and AXA holds 26%.
Ravi Samalad & Swapnil Suvarna


-- Sucheta Dalal