Transportation & Logistics Fund: What are the benefits and risks associated with it, know everything here...


Transportation & Logistics Fund: Transportation and Logistics are considered the growth engines of any economy. Given the growth potential of these sectors, investors can make huge profits if invested at the right time. The interesting aspect of this theme is that it consists of several sub-sectors. Therefore, it is important to understand the positive and risk factors of each of these segments before taking an investment decision.


What happens
Transportation includes auto manufacturers, be it two-wheelers, three-wheelers, tractors, passenger vehicles, or commercial vehicles. This also includes all their component suppliers which are popularly known colloquially as auto ancillaries.

Thousands of parts in a car
Visually a car looks like a compact product. But the reality is that if one starts counting every part down to the smallest screw, nut, and bolt, there are about 30,000 parts in a car. Some of these parts are made by the car manufacturer itself, but there are others for which the auto industry relies on suppliers who make many of these parts. Raw materials and various manufacturing processes are used to make each of these parts.

What comes under logistics
It is a sector that is currently in limelight due to the recently announced New Logistics Policy (NLP) by the government. It includes all industries that are responsible for moving goods from a producer to their final consumer. Hence the entire supply chain, rail, shipping companies, delivery, and courier companies are part of the logistics sector.


What are the investment opportunities?
For a retail investor, it is a challenging task to research all the companies available in the transport and logistics segment and then arrive at an investment decision. This is where theme-based mutual funds can come in handy. Recently ICICI Prudential and IDFC Mutual Fund have launched funds based on this theme. UTI also has a fund. If the history of new fund offers is to be seen, ICICI Prudential has a better track record of identifying premature cycles. This is reflected in the timely launch of various schemes introduced by them over the years.

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