Cyclical stocks sky-rocketed in the 2014 rally on hopes of big-bang reforms. Infrastructure funds as a category delivered strong returns of 63 per cent during this rally. But these funds lost steam in 2015, as buoyant expectations soon gave way to a renewed downturn. Most funds closed the year with minor losses of 0.5 per cent. However, prospects of a pick-up in the reforms momentum rekindled hopes. It is no surprise then that infrastructure funds have bounced back over the last one year. The top five infrastructure funds with a corpus of over ₹100 crore have gained 18.2 per cent, much higher than S&P BSE Sensex which gained 11 per cent.

The top-performer in the category is SBI Infrastructure Fund, which returned 21.1 per cent in the last one year. Benchmarked to the Nifty Infrastructure Index, its top sector holding is construction — about a third of its assets. Falling oil prices likely prompted the fund to increase exposure to energy from 16 to almost 22 per cent over the last one year. Its top three stock picks — Larsen and Toubro, Bharti Airtel and NTPC — make up around a fourth of its corpus. A strong 106 per cent rally in ITD Cementation and 68 per cent gains in V-Guard Industries boosted the fund’s performance, while a 13 per cent fall in Larsen & Toubro and Bharti Airtel reduced returns.

L&T Infrastructure Fund, with 19.6 per cent gain, ranks second. Industrial capital goods, which was its top sector pick in July 2015, has now been replaced by construction projects with a 21.7 per cent share. Cement, has now climbed to second spot with about a fifth allocated. Industrial capital goods slid to third spot with 15 per cent allocation, down from 22.5 per cent a year ago. The fund’s allocation to Grasim paid off as the stock rose 32 per cent.

The third-ranked Franklin Build India Fund gained 17.6 per cent. The fund, which allocated a fourth of its assets to banks in July 2015, raised it to almost 40 per cent in July 2016.

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