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Boom-Time for Reliance Infra Fund

Investors have flocked to the fund beyond even the found house’s expectations

The Reliance Mutual Fund’s (MF) infrastructure fund has just proved that the money gathering momentum of the industry is still intact and perhaps a little more than that. Raising industry expectations to new heights.

Reliance MF had itself projected a collection between Rs 1,500-Rs 2,000 crore, but investors found enough reason in its logic to invest in excess of Rs 2,300 crore – the final figure is yet to be tabulated.

The new fund closed on June 23 after it opened for subscription on May 28.

The scheme seeks long-term capital appreciation by investing in infrastructure companies and those indirectly related to the infrastructure sector. Its ambit includes construction, metals and minerals, power and power equipment, telecom, banks, ports, and other related areas in the segment.

The fund can maintain 35 per cent of its assets in cash and fixed income investments.

Another scheme from Reliance MF, Reliance Natural Resources Fund, which garnered Rs 5,600 crore, was the last extremely successful fund via its new fund offer (NFO).

Officials believe that since infrastructure is a major thrust area in the country, as insisted by the government and taken to heart by all and sundry, there are hopes of a spurt in the spending on this sector especially after getting a stable administration at the Centre was voted in.

This strong infrastructure potential might have led to such a positive response from the investors.

Currently, the 12 open-end infrastructure funds in existence together manage close to Rs 11,300 crore. Most of these funds have been launched in or after 2004, the oldest being UTI Infrastructure Fund that was launched in April, 2004.

The strength of the infrastructure theme is reflected in the performance of these funds -- of the 12 funds, 8 funds are 4 or 5 star rated by Value Research Ratings, while 1 is 1-star rated and 3 are unrated funds.

Recently, another NFO, an equity-oriented fund, launched by ICICI Prudential and called the Target Returns Fund was able to garner Rs 800 crore in May.