Don't Invest in Infrastructure Funds Until You Read This Shocking Comparison

The infrastructure sector presents compelling investment opportunities as India accelerates its development trajectory with massive government spending commitments. Among the prominent options, two funds stand out for consideration: Quant Infrastructure Fund Direct Growth and ICICI Prudential Infrastructure Fund Direct Growth. Both funds target the same growth narrative but employ different strategies and risk profiles.

Performance Analysis: Returns Tell the Story

When examining recent performance metrics, ICICI Prudential Infrastructure Fund demonstrates superior stability with a modest 0.19 per cent return over the past year, while Quant Infrastructure Fund faced headwinds with a -9.19 per cent decline. This divergence becomes more pronounced when considering the three-year performance landscape.

ICICI Prudential Infrastructure Fund has delivered impressive three-year returns of 29.04 per cent, significantly outperforming Quant Infrastructure Fund's 18.17 per cent. The five-year performance comparison reveals ICICI Prudential maintaining its edge with 36.66 per cent returns against Quant's 34.47 per cent. These figures underscore the consistent performance advantage of ICICI Prudential's management approach.

The asset management scale also differs considerably between these funds. ICICI Prudential Infrastructure Fund manages a substantial Rs 7,645 crores in assets under management, while Quant Infrastructure Fund oversees Rs 3,140 crores. This size advantage often translates into better liquidity management and reduced impact costs during portfolio adjustments.

Risk Profile and Volatility Assessment

Risk characteristics reveal fundamental differences in fund management philosophy. Quant Infrastructure Fund exhibits higher volatility with a standard deviation of 18.89, compared to ICICI Prudential's more moderate 14.86. This translates into more pronounced price swings for Quant investors, requiring greater risk tolerance.

The Sharpe ratio comparison further emphasizes this distinction. ICICI Prudential Infrastructure Fund achieves a superior Sharpe ratio of 1.33, indicating better risk-adjusted returns compared to Quant's 0.64. This metric suggests that ICICI Prudential delivers more return per unit of risk undertaken, making it attractive for risk-conscious investors.

Both funds carry "Very High" risk ratings, reflecting the inherent volatility of infrastructure investments. However, ICICI Prudential's track record demonstrates better risk management capabilities through market cycles.

Portfolio Strategy and Holdings

The portfolio construction approaches differ significantly between these funds. ICICI Prudential Infrastructure Fund maintains a well-diversified portfolio with Larsen & Toubro Ltd leading at 9.42 per cent, followed by NTPC Ltd at 4.75 per cent. The fund's sectoral allocation includes construction at 26.28 per cent, private banks at 8.55 per cent, and power generation at 8.25 per cent.

Quant Infrastructure Fund pursues a more concentrated approach with construction dominating at 36.68 per cent of the portfolio, followed by energy at 23.65 per cent. Key holdings include Larsen & Toubro Ltd at 10.23 per cent, Tata Power Company Ltd at 8.08 per cent, and Reliance Industries Ltd at 7.23 per cent. This concentration strategy amplifies both opportunities and risks within specific infrastructure segments.

The market capitalization distribution also varies markedly. Quant Infrastructure Fund allocates 59.09 per cent to Large-Cap stocks, 31.94 per cent to Small-Cap holdings, and 4.23 per cent to Mid-Cap investments. This higher small-cap allocation introduces additional volatility but potentially greater growth prospects.

Management Excellence and Expertise

ICICI Prudential Infrastructure Fund benefits from the experienced leadership of Ihab Dalwai, who has managed the fund since June 2017. Dalwai's credentials include Chartered Accountancy qualification and CFA charter, with over 14 years at ICICI Prudential AMC. His management extends across multiple funds totaling over Rs 1 lakh crores in assets.

Quant Infrastructure Fund operates under a team-based management approach led by multiple fund managers including Ankit Pande, Sanjeev Sharma, and others. While this provides diversified perspectives, it may lack the focused expertise that comes with dedicated single-manager leadership.

Cost Structure Comparison

Expense ratios significantly impact long-term returns. Quant Infrastructure Fund charges a competitive 0.66 per cent expense ratio for its direct growth plan, while ICICI Prudential Infrastructure Fund's expense ratio stands at 1.14 per cent. This 0.48 per cent difference may appear modest but compounds over extended investment horizons, potentially affecting overall returns.

Both funds impose exit loads for short-term redemptions. ICICI Prudential charges 1 per cent if redeemed within 15 days, while Quant imposes 0.5 per cent for redemptions within three months. These structures discourage short-term speculation while protecting long-term investors.

Disclaimer: All investments carry market risks and past performance is not indicative of future results; please read scheme documents and consult a financial advisor before investing.