Tata's Indo-Global Infrastructure Fund: Strategic edge

Tata Mutual Fund is cashing in on the success of its domestic infrastructure fund to launch Tata Indo-Global Infrastructure Fund.

The latest fund, as its name suggests, will invest a part of the fund in companies abroad. It’s a three-year closed-ended scheme that will invest a little under 35% in companies related to the infrastructure theme outside the country.

The fund’s CEO said the benefits of investing in global listed infrastructure securities is that these companies typically display a strategic comparative advantage, economies of scale and relatively inelastic demand. A scheme that invests only a part of assets abroad is not a very effective vehicle for diversification.

Fund houses which launch such schemes claim that investing only a part of a fund outside India makes it tax efficient, as these are taxed as equity funds (funds which invest 100% abroad are taxed as debt funds). But long-term investors are unlikely to be impressed by the tax efficiency theory, as these tax laws are likely to change in future.