Sunday July 20, 02:21 AM
Cracking infrastructure
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By Dhirendra Kumar
All the indices, which are related to infrastructure such as BSE Capital Goods, Oil & Gas and Metal, posted three digit returns in 2007. For past two years, infrastructure funds have outperformed not only other sectoral funds but even in the equity diversified category these were among the very best. Despite its success in the preceding years, recent events have hit them the most. Rise in interest rates have hit some of the underlying industries like automobiles, cement, real estate, metals very hard and is unraveling the growth story. DSPML Tiger The broad mandate of the fund has enabled it to tap into sectors that core infrastructure funds do not - Healthcare, FMCG, Textiles, Consumer non-durables, Media & Entertainment. It has given impressive returns during the bull but has not been able insulate itself in falling market. In the bear run the fund has fallen as much as 36 per cent. ICICI Pru Infrastructure A clear winner, it has outperformed its peers as well as other diversified equity funds. This fund has displayed the ability to move against the herd and speedily move in and out of sectors. In 2007, the fund's exposure to Basic Engineering was just 6 per cent when the average exposure of infrastructure funds was around 19 per cent. A large-cap fund with an optimally diversified portfolio of around 42 stocks makes this a good pick in the infrastructure space. Sundaram BNP Paribas Capex Opp The fund has kept a very focused sectoral allocation with top three accounting for 50 per cent of the portfolio. True to its mandate it has invested heavily in capital goods industries like ABB, BHEL and L&T. The fund keeps a well-diversified portfolio of 60 stocks. It has primarily been an aggressive mid-cap fund, which might find itself in tougher times ahead with slow down in the manufacturing sector. Tata Infrastructure Not only has it delivered returns higher than the peers, but has also managed to defend itself better when the market tanked. The superior performance can be attributed to the fund manager's astute sector calls. He does not hesitate in making concentrated sector bets. On an average, the fund holds around 60 stocks in its portfolio and rarely does any stock account for more than 4 per cent of the entire portfolio. The fund unlike its peers keeps a lesser concentration of just 16 per cent in top five stocks. UTI Infrastructure The fund initiated the infrastructure theme with its launch. It is a hard-core infrastructure fund that focuses on Energy, Basic-Engineering, Construction, Metals and Telecom. In other sectors like automobiles, consumer durables and non-durables, the fund manager went in only to take advantage of a temporary upside. Though its performance of late has come down, but both in 2005 and 2006 it was the best among infrastructure funds. The author is CEO, Value Research
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