Hopes of revival in the economy and investment activity picking up pace have spelt good news for infrastructure funds that predominantly bet on cyclical stocks.

Over the last one year, these funds have clocked a return of 24.3 per cent, which is next only to banking funds. IDFC infrastructure (43.6 per cent) and L&T Infrastructure (38.4 per cent) were the top performers among them. On the other hand, infra funds of SBI and ICICI Pru were laggards, delivering 13.6 per cent and 21 per cent, respectively, over the past year.

ICICI Bank, KNR Constructions and Kalpataru Power Transmission were top contributors to returns of ICICI Pru in the last one year. Strong international order flows (especially from Africa), good execution skills and growing tower market drove the stock price of Kalpataru in the last one year. However, ICICI Pru’s investments into Coal India, Gujarat Pipavav Port and Gateway Distriparks were a drag pulling down overall performance.

The stock price of Coal India took a beating last year on the back of increased costs (especially employee costs), which is expected to continue even in the next financial year.

Adani Transmission (279 per cent), Vedanta (121 per cent) and Engineers India (76 per cent) were top contributors to returns of IDFC infra in the last one year. Opportunities in the inter-state transmission space as well as strong order book kept the interest going in the counter of Adani Transmission.

Praj Industries (-10.3 per cent) and Snowman Logistics (-6.1 per cent), on the other hand, pulled down overall fund performance.

Franklin Build India piggybacked on the performance of banks — with its four of the seven best contributors to returns in the last one year coming from them. SBI (40.9 per cent), HDFC Bank (38.3 per cent) and IOC (107.7 per cent ) were its star performers in the last one year.

While the core performance of banks hasn’t improved, stock prices have rallied largely on the expectation of economic recovery. Idea Cellular (-30.2 per cent), Tata Motors DVR (-7.6 per cent) and Orient Cement (-10.1 per cent), on the other hand, were a big drag on Franklin Build India’s performance.

The market share of Idea Cellular has been falling nationally in the last one year with the onslaught of new players — notably Reliance Jio.

Multiple options

Interestingly, most infrastructure funds do not limit their portfolios to just infrastructure-led stocks; they invest a notable portion in banking stocks, telecom services, oil stocks and more. IDFC Fund had the highest exposure to construction sector (31 per cent), while it was banking (39 per cent) for Franklin, industrials (23 per cent) for Birla and power (19 per cent) for ICICI Pru.

During the year, ICICI’s exposure to transport and construction sector increased.

For Birla, exposure to banks reduced while that of non-ferrous metals and gas sector has increased.

Franklin had considerable investments outside what could normally be construed as infrastructure. It had exposure to banking, media and entertainment, hotel and pharma.

During the year, IDFC and Franklin had slightly increased the cash (including debt) levels and its exposure was currently hovering at about 10 per cent and 7 per cent levels respectively.

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