When it comes to returns on Infra in 2024, infrastructure funds have dominated the charts both this month and thus far. Nineteen schemes have averaged May returns of 5% and year-to-date returns of 29%. This is more than three times the YTD returns provided by Nifty, which is 8%. In the meantime, the 50-stock index has declined by 74 points, or 0.32%, from April to May.
Bandhan Infrastructure Fund-Reg(G), LIC MF Infra Fund-Reg(G), Quant Infrastructure Fund-G, Canara Rob Infrastructure Fund-Reg(G), and Invesco India Infrastructure Fund-Reg(G) are the top five schemes in the infrastructure mutual fund category.
| MFs | YTD returns (%) | 1-mo returns (%) |
|---|---|---|
| Bandhan Infrastructure Fund-Reg(G) | 37.82 | 7.04 |
| Canara Rob Infrastructure Fund-Reg(G) | 32.64 | 10.73 |
| Invesco India Infrastructure Fund(G) | 31.86 | 8.70 |
| LIC MF Infra Fund-Reg(G) | 34.91 | 7.95 |
| Quant Infrastructure Fund(G) | 32.65 | 1.76 |
A Motilal Oswal research states that significant shifts in the industry and the distribution of funds’ stocks occurred in May. Mutual fund schemes saw an increase in the weights of infrastructure counters on a month-over-month basis, a pattern that was also observed in other sectors such as capital goods, metals, and cars. Infrastructure stocks saw the most rise in value, MoM, as well.
Top infra schemes by NAV change
| Scheme | Equity AUM (bl Rs) | MoM NAV(%) |
|---|---|---|
| Canara Robeco Infrastructure | 7.5 | 10.7 |
| HSBC Infrastructure Fund | 26.8 | 8.9 |
| Invesco India Infrastructure Fund | 13.1 | 8.7 |
| Kotak Infrastructure & Economic Reform-SP | 20.0 | 5.6 |
| Nippon India Power & Infra Fund | 54.3 | 5.2 |
| Tata Infrastructure Fund | 22.7 | 5.1 |
| UTI-Infrastructure Fund | 23.2 | 5.0 |
| Aditya Birla SL Infrastructure Fund | 11.7 | 4.6 |
| Quant Infrastructure Fund | 32.8 | 1.8 |
Sectoral and theme funds are combined by the Association for Mutual Funds in India (Amfi), however Ace Equities handles them as distinct categories. There are 77 thematic funds, 62 foreign Fund of Funds (FoF), 8 global, and 5 MNC funds, according to Ace.
Sector-specific mutual funds comprise 21 schemes related to banks and financials, 15 schemes focused on consumption, 4 schemes on energy and electricity, 14 schemes on pharma and health, 2 schemes on the service industry, and 9 schemes on technology. Their respective YTD returns are 6.89%, 13.90%, 22.71%, 14.65%, 11.04%, and 6.11% on average.
The YTD returns for theme funds, FoF (overseas), Global, and MNC are 18.83%, 6.80%, 7.96%, and 13.35%, in that order.
Increasingly, investors are putting their money into sector-specific or theme-based mutual funds. Out of its ten peers that are equity-oriented mutual funds, their net inflows were more than Rs 19,200 crore, making them the largest. Experts claim that the growing influence of this category is a result of investors’ desire in topics with greater growth potential.
Adhil Shetty, CEO of Bankbazaar.com, explained why infra-based themes are generating better returns by pointing out that the Modi 3.0 government is likely to place a strong priority on infrastructure development, which has increased capital inflow. He noted that the government’s goal is to accelerate economic growth by building roads, railroads, and urban infrastructure, emphasizing that this strategy will have long-term positive effects on the economy.
He believed that thematic funds, such those focused on infrastructure, provide investors with the chance to profit from particular themes or trends in the economy. “Investors are looking for ways to increase returns, and one such way is to put money into industries that are predicted to do well because of favorable macroeconomic trends. Interest in some themes has increased as a result of the continuing economic reforms, the CEO of Bankbazaar continued.
Along with other noteworthy potential money spinners like the defense, manufacturing, and financial services sectors, Sandeep Bagla, CEO of TRUST Mutual Fund, is also highly positive about the infra market. Bagla believes that the 100 days leading up to the full Union Budget 2024 will be critical in providing markets with hints regarding the direction and scope of government measures.
In order to guarantee the sustained growth of the domestic economy, the government must implement a new round of reforms pertaining to critical inputs such as land, labor, capital, and technology. The areas that are probably going to be prioritized include infrastructure, defense, manufacturing, financial services, etc.,” he continued.
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The CEO of TRUST Mutual Fund also credited AMCs with effective marketing skills for the rising popularity of sectoral and theme products. He continued, “They have been successful in making themes like manufacturing and physical infrastructure popular among investors.”
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