Informed Investing is all about looking at risks and recognizing the opportunities that it holds. And the key to become a good investor lies in becoming an avid reader. Gathering relevant information on your preferred choice of investment will enable you to foresee your future with this investment. Why am I emphasizing so much on information? Well, there’s a new avenue for investing that is making its presence felt in India after creating a stir in the global markets. It is called ‘Infrastructure Funds’.
From the amount of reading I have done (am still not done yet), ‘infrastructure fund’ will rule the roost for sure in the coming decades. How? Just get these facts into perspective, and you will find your answer:
In the next decade, another one billion new inhabitants will be added to the world’s population. The cost of providing them basic amenities such as housing, energy and other infrastructure facilities is estimated to touch more than $20 Trillion.
If we talk specifically about India which already has a population of one billion plus, our current level of energy consumption is very low. For example: it is estimated that 44% of households still do not have access to electricity. Given a targeted GDP growth rate of 7 to 8 % and the expected population growth, the energy requirements of the country are expected to grow at 5.6 to 6.4 % per annum over the next few years.
Energy powers the economic growth of any nation. Availability of energy with required quality of supply is the key to sustainable development. Substantial opportunities exist in the energy sector in India be they in exploration, generation, transmission, distribution, trading, manufacture of power equipment and financing of the varied business ventures.
Touted as the next super-power, India is gearing up for extensive modernization which implies upgradation as well as development of new infrastructure projects.
Infrastructure funds are considered to be the ideal vehicle for diversification of risks. This is because and I quote that from a financial expert’s take on this matter that ‘Infrastructure assets are inversely correlated to the historical returns of most other investment categories’.
There has been a sharp rise in the number of the financial players floating infrastructure funds across the globe with $350 million to $1 Billion in equity commitments. India too, is ready to harness the potential offered by this fund. Taking the lead in India is none other than The Infrastructure Development Finance Corporation (IDFC). After the roaring success enjoyed by their first infrastructure fund, IDFC is in the process of raising an estimated $350-450 Million through their second infrastructure equity fund. And joining the bandwagon is Unit Trust of India (UTI) Energy Fund. You can read more about it on: www.utimf.com.
Infrastructure funds appear to be a good long-term investment option that promises a good return on investment. But don’t just take my word on it. Read up. Ask for information. Listen to experts. Analyze the information before you, and assess your financial goals. And eventually, take your ‘own’ decision. Be sure to make an informed choice.
Happy Investing!
