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Infrastructure MFs are flavour of the year

CMA Gul S , Last updated: 13 September 2007  

It’s not just the infrastructure sector that is witnessing fund inflows from a cross section of investors, including private equity players, for the past year. Schemes floated by mutual funds (MFs) have also piqued investor interest, as a result of which they have outperformed the benchmark indices in terms of returns.

In line with the slide in equities over the past month, on the other hand, schemes dedicated to the pharma and technology sectors have performed badly compared with the respective sectoral indices of the BSE.

According to data released by Religare MF Research, infrastructure MF schemes have provided a return of 85% over a one-year period. Compared with this, the Sensex offered a return of only 39.44% and the S&P CNX Nifty of the NSE generated a return of 38.68%.

R Rajagopal, vice-president & CIO, DBS Chola MF, said, “With huge investments planned to set up massive infrastructure, companies engaged in this sector will witness impressive growth. Expecting good returns from this sector, funds were launched that were well-poised to capture investment opportunities and offer attractive investment avenues for long-term investors.”

JM Basic Fund (Growth), with a corpus of around Rs 306.34 crore, has a provided a return of 84.98% over the last one year. ICICI Prudential Infrastructure Fund has outperformed the Sensex with a return of around 66% and DSP ML’s India Tiger Fund has offered 64.31%.

In the shorter run, however, currency fluctuations and market volatility have taken the sheen off the information technology and pharma sectors. A senior fund manager at a domestic fund house said that heavy exposure to front running IT stocks have impacted the funds’ performance. The meltdown in IT majors took place due to an appreciation in the rupee against the dollar.

According to Value Research, pharma funds have provided negative average returns of 6.36%, against negative returns of 6.2%, or a fall of 240 points, in BSE’s healthcare index, which stood at 3,598 points on August 6, over a one-month period.

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