IDFC and ICICI Bank launch Transportation and Logistics Fund for Mobility sector

Mumbai, India (Urban Transport News): IDFC and ICICI Banks have launched the Transportation and Logistics Funds, an open-ended equity scheme that will invest in the transportation and logistics sector, aiming to benefit from the multi-year growth opportunity in the mobility services sector.

The IDFC Transportation and Logistics Fund is opened on 4th October 2022 and will close for subscription on 18th October 2022 while the ICICI Transportation and Logistics Fund will opened today i.e. 6th October 2022 and will close on 20th October 2022. 

“Rapid urbanization is accelerating growth in personal mobility requirements. Additionally, powerful enablers like a strong demand-led recovery cycle and margin improvement provides visibility for strong earnings growth for the transportation and logistics sector. Growth in this sector is expected to be driven by rising aspirations, enhanced infrastructure, a surge in volumes and export-driven opportunities. The IDFC Transportation and Logistics Fund will be actively managed by a team which has a strong pedigree and expertise in leveraging the vast opportunities across this attractive value chain,” said Vishal Kapoor, CEO, IDFC AMC.

"The Transportation and Logistics sector consists of 16 sub-sectors, providing a wide spectrum of investment opportunities and facilitating effective diversification of the portfolio. NSE data as of August 2022 indicates that the Nifty Transportation and Logistics Index has outperformed the Nifty 500 Index in 8 out of 11 calendar years from 2012 to 2022 (YTD Aug’22), demonstrating the potential of this sector to provide relatively higher returns over the long term. The IDFC Transportation and Logistics Fund has a bottom-up stock selection approach with investment across market cap segments, facilitating focus on the business-specific aspects and aligning the execution with a medium to long-term view. The fund invests predominantly in companies that are part of the Transportation and Logistics sector with the flexibility to allocate up to 20% of its net assets to international businesses and companies of other sectors that have a compelling risk-reward opportunity,” said Daylynn Pinto, Fund Manager for IDFC Transportation and Logistics Fund.

“Transportation is an under-penetrated market in India. The new policy on logistics by the government underlines the key role played by the sector in the economic growth of the country. Formalisation of the economy and positive correlation to GDP growth and the government’s initiatives to reduce costs and improve efficiency, all stand to benefit the sector in the coming years. With muted performance in the last couple of years, we believe the theme is coming out of the woods and there are more legs to recovery,” said Chintan Haria, head – product development and strategy, ICICI Prudential AMC.

“Coming to logistics, formalisation of economy i.e., shift from unorganised to organised sector aids in the growth of logistics space. India’s logistics market is estimated at $216 billion, out of which organised players contributed only about 3.5 per cent ($6-7 Billion) in FY 2020. We expect disruption in this segment and market share shift from unorganised to organised players, as Indian e-commerce shipments growth plays out. Going forward, government initiatives may lead to cost reduction and increase efficiency,” he added.

The scheme will predominantly invest in equity and equity-related securities of companies engaged in the transportation and logistics theme. It will also invest in sectors and/or stocks that form a part of Nifty Transportation and Logistics TRI which is also the benchmark of the offering. The scheme will invest about 80 per cent in companies forming a part of transportation and logistics theme and up to 20 per cent in other equity/equity related instruments.