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Advice by Rajani Tandale, Senior Vice President, Mutual Fund at 1 Finance

Infrastructure as a theme certainly aligns with India’s long-term growth story—government spending on roads, smart cities, renewable energy, logistics, and digital infrastructure will remain a key driver for the economy. However, by design, infrastructure funds come with higher cyclicality, concentration in a few sectors, and exposure to leverage and execution risks. The fact that they underperformed flexi-cap funds in the last year (–5.6% vs. positive returns) is a reminder that sectoral themes can lag broader diversified strategies, even when the long-term outlook looks promising.

The risks are evident in market downturns. In the recent correction, infrastructure funds on average fell by about –25%

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