DSP Investment Managers (DSPIM) has announced an Old Fund Offering (OFO) of the DSP India T.I.G.E.R. Fund (The Infrastructure Growth and Economic Reforms Fund) to highlight the opportunity for investors to benefit from growth revival in the economic cycle & economic reforms.
DSPIM believes that investment cycle has bottomed and has all the factors for the cycle to pick-up, providing visibility on spending for next 3-5 years. Key buildings blocks are also expected to be in place such as favourable macros and implementation of key reforms. Hence, infrastructure investment could be the key to driving GDP growth for the country.
Three key segments of Government, Private and Real Estate sectors are expected to see a pick up in spending. Government’s initiative on National Infrastructure pipeline provides a multi-year visibility on spending in sectors like roads, railways, water and airports. This is expected to drive demand for key inputs like Cement, Steel and other capital equipment, thereby driving the capacity utilization for private sector and revival in capex. Structural drivers are also in place for a multi-year demand cycle in the real estate sector owing to three factors – lowest mortgage rates, stagnant property prices and multi decade low difference between tax adjusted mortgage rates and rental yields.
DSPIM believes that India has a strong opportunity to scale up its manufacturing to benefit from the global requirement to diversify supply chains. The government’s initiatives in terms of clamping down on imports, imposition of duties and announcement of incentives for setting up domestic manufacturing capacities as part of performance linked incentives (PLI) scheme should help us achieve this goal. PLI related investments are expected across electronics, chemicals, pharma and consumer durables over the next five years.
DSPIM also sees new themes emerging in this capex cycle such as automation and digitalization, data centres, renewable energy and electric vehicles. As the weight of these investible sectors reduce in the Nifty 50 index to 25% as on Sep 21 from 67% in Dec 07, thematic funds offer the opportunity to benefit from this pick up in investment cycle.
The DSP India T.I.G.E.R Fund seeks to reduce concentration risk by owning a higher number of good quality stocks and identifying themes and businesses with higher visibility, lower cyclicality and better growth potential. The fund also tries to have a balance between cyclical and secular growth sectors.