NEW DELHI, November 16: The Unit Trust of India's (UTI) soon to be launched infrastructure fund will invest in core sector companies operating in the areas of steel, cement, power, construction equipment and capital goods.Speaking to The Financial Express, Basudev Sen, executive director, Unit Trust of India said the fund will target companies in these sectors as they are expected to witness a surge in demand as more power plants, ports and road projects get off the ground.

The central government and various state governments are struggling to formulate guidelines for various infrastructure areas.

Inviting the private sector in these areas involves dealing with a number of complex issues which cannot be resolved easily. Once guidelines are ready core sector companies will be assured of high demand as these infrastructure projects will generate huge demand for items as steel, cement and several such building inputs, he said.

As core group companies witness higher sales, investments in these companies will get high returns, Sen remarked.

The fund will not invest in new infrastructure projects as these will have a long gestation period and are not exactly suitable to arouse sufficient investor interest, he said.

Other details of the fund -- whether it will be open to foreign investors, the structure of the fund and the launch date of the fund -- are being finalised at the moment, he said. This will be the third sector specific fund that UTI will launch. Earlier in the year, in June, UTI had launched the India Infotech Fund and in September it launched the India Public Sector Fund.

UTI is now going to focus on sector specific funds as a focused investment strategy as it will enable the trust to adopt a well-directed investment strategy. The rationale behind such sector specific funds is that they are easier to brand and are acceptable to investors readily.