Fund tracker: Infrastructure funds outperform benchmarks

Mutual fund managers are advising investors to build their portfolio around infrastructure stocks, saying they see such stocks doing well amid expectations that the 2014 national elections will lead to a strong and stable government at the Centre.

Infrastructure-focussed mutual funds such as HDFC Infrastructure, SBI Infrastructure, Birla Sun Life Infrastructure and UTI Infrastructure have delivered returns up to 30% over the past three months on hopes of a pick-up in the investment cycle next year. This compares with the 13% return offered by the benchmark NSE CNX 500 Index over the same period.

“The valuations of many infrastructure stocks were beaten down and the expectations were also low,” said Anoop Bhaskar, group president and head of equity at UTI Mutual Fund. “Thus, the outperformance by infrastructure companies in the stock market is not surprising.

Going forward, expectations of a stable government at the Centre, post national elections, and continuation of reform process by the government, the infrastructure stocks will perform well.”

Market experts say if BJP comes to power, it will announce policies to boost the economy and revive stalled projects. They say infrastructure, power and capital goods will be the obvious focus areas and these stocks are closely linked to changes in the investment cycle.