Much of the economic growth in India, especially during the post-Covid period, has been fuelled by heavy investments made in the infrastructure space, largely by the government and a select few capex intensive segments of the industry. Energy, railways, telecommunications, civil aviation, ports, shipping & waterways, road transport & highways have seen capex growth of 37.1-88.1 per cent compounded annually over FY20-FY24. For FY26, the government has budgeted ₹11.21 trillion to be spent on capital expenditure, representing a growth of 10.1 per cent over the estimated outgo in FY25. Given this background, as an investment theme, infrastructure is still attractive for an emerging economy such as India that hopes to achieve 6-7 per cent growth for the foreseeable future. To be sure, several funds themed on infrastructure have been around for more than a decade now and many have a reasonably healthy track record. In this regard, Motilal Oswal has rolled out a new infrastructure fund that will be open for subscription till May 7. Read on to get a perspective on the new fund offer and also the track record of existing fund to take an informed call. What the new fund is about Motilal Oswal Infrastructure fund seeks to benefit from several underlying themes that would lead to rapid expansion in many sub-segments. So, China plus one, Make in India, urbanisation, financialisation, consumer tech and digital infrastructure, healthcare ecosystem, telecom penetration could all be potential drivers of growth in the coming years. The fund has a wider definition of infrastructure to include several segments: automobiles and components, capital goods, construction and materials, healthcare, oil, gas & consumable fuels, power, realty and telecom. This wider scope gives more opportunities for the fund to invest in. India is set to spend 22.1 per cent of the total budgeted amount in capital spending (the highest proportion over the years) in FY26. Indeed, capex on defence, railways, housing and roads has risen 3x to 17x from FY11 to FY25. The fund will use its QGLP framework to select stocks. Quality (ROE, ROCE), growth, longevity and price (PE, PEG and DCF) criteria would be used to zoom in on the best set of stocks in the infrastructure theme. Should you invest? As mentioned earlier, infrastructure have a long track record. From being narrowly focused on power, capital goods about 15 years ago, these funds have become more diversified with many segments added into the infrastructure theme. On a rolling five-year returns basis from January 2013 to April 2025, all the 18 active funds in the theme have managed to beat the Nifty Infrastructure TRI comfortably. The top 10 in terms of mean returns over the aforementioned period on a 5-year rolling basis are given in the table. As a theme, it is important to note that infrastructure funds can deliver volatile returns. From the table, it is clear that even over five-year rolling periods, there can be periods of negative returns from funds. However, over long holding periods of 7-10 years or more, these investments have been rewarding. ICICI Prudential Infrastructure, Invesco India Infrastructure, BoI Manufacturing & Infrastructure and Franklin Build India are funds that have a long track record of delivering robust returns. These funds must be among the preferred choices for investors looking to bet on the infrastructure theme. As a fund house, Motilal Oswal has many schemes that have delivered well across equity categories. But given that the infrastructure theme is risky, investors will need to watch for the new scheme’s ability to juggle the various segments within the theme. As investors already have proven funds that track the theme, they need to take a call on whether they need any additional exposure at all to this scheme. However, investors with a high-risk appetite can consider small SIPs in the scheme if they can stay put for the long term. Published on April 26, 2025