Rising markets boost infra scheme returns to 85% on average past one year

Industry players see this theme doing well going forward due to green shoots in some segments on the economy and govt's infra thrust

The booming stock markets have boosted returns for infrastructure funds, which had fallen out of favour. The data from Value Research shows that on an average infrastructure funds offered by mutual funds (MFs) have delivered returns of 85 per cent in the last one year

Industry players expect this theme to do well going forward due to green shoots seen in some segments on the economy and the government’s thrust on infrastructure development.

Quant Infrastructure Fund and Aditya Birla Sun Life Infrastructure Fund have given highest returns of 152 per cent and 100 per cent respectively in the last one year.

Infrastructure Funds has collective assets under management (AUM) of around Rs 11,000 crore. In the last one year out of 21 schemes, 12 schemes have delivered returns of more than 80 per cent.

Stocks such as Larsen and Toubro, Ultra Tech Cement, Adani Ports and Special Economic Zone and NTPC are some of the holdings of key funds in this category.

“The recent run-up in the equity markets have propelled the returns of infrastructure funds which were languishing for a long time. Despite the pandemic, we expect the government to continue with infrastructure-led development which would help the sector in the years to come,” said a senior official from the industry.

Several of the infrastructure funds were launched during the bull market of 2004-07, but funds failed to deliver returns due to the global financial crises.

For the last decade, infrastructure funds have given average returns of just 9.5 per cent, compared to large cap funds which gave returns of around 12 per cent.

Despite the funds performing well in the last one year experts still suggest that they should opt for the diversified equity funds rather than investing large portions of money into thematic funds.