CANARA ROBECO INFRASTRUCTURE
This tiny fund packs quite a punch. After an absolutely dismal 2006, it shot to prominence in the bull run of 2007 and 2009. Its fall in 2008 was in-line with the category average.
Fund’s philosophy is to buy stocks with a secular growth story. It focuses on long-term growth opportunities in India and not market direction.
In December 2008, when the fund’s exposure to cash and debt was high amongst equity funds, it was exposed 83 per cent to equity, which rose to 88 per cent over the next two months. By March 2009, it was at 90 per cent and by May, it was fully invested (96 per cent). This put the fund in an enviable position.
Despite the agility a small fund offers, this fund opts for a large-cap bent, refrains from frequent churning and tilts towards a buy-and-hold approach.
| Trailing Returns | |
| Period | Return (%) |
| 3-month | 4.25 |
| 6-month | 6.23 |
| 1-year | 28.28 |
| 3-year | 11.74 |
| 5-year | - |
There has been a tilt in the fund’s portfolio from asset creators to asset owners. The fund manager is cautious on infrastructure as it is a very long-term growth story and the sector is richly valued. Hence, stocks like L&T are out but GAIL and Mundra Port are in.
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The corpus being small, the fund goes with a portfolio of around 35 stocks, which are fairly diversified relative to size. The allocation of 58 per cent to the top 3 sectors is in-line with the category average.
ICICI PRUDENTIAL INFRASTRUCTURE
Launched in 2005, it showed promise the very next year, followed by great performance. It trounced the competition in 2007 and restricted its fall in 2008.
Its calls have worked in favour, mostly. In 2007, it was metals that clinched the deal for the fund. In 2008, it was it’s conservative stance of cash and debt allocations, bets on the Nifty, derivatives exposure and an overall large-cap equity tilt. Come 2009, the fund slipped in rankings because it continued to be cautious. In the initial leg of the 2009 rally (March to May), it delivered 63 per cent (category average = 78 per cent).
But the fund does not change its strategy abruptly. Right now, the portfolio gives the impression of being conservative and large-cap tilted, and rightly so. But it might change.
| Trailing Returns | |
| Period | Return (%) |
| 3-month | 0.21 |
| 6-month | 0.94 |
| 1-year | 21.17 |
| 3-year | 11.47 |
| 5-year | - |
While the portfolio may sport a totally different look months down the road, what you can be sure of is that its bets are valuation driven. By default, this fund shows up as a contrarian compared to the peer group. Right now, its exposure to construction is zero, while exposure to engineering is lower than that of his peers. It has been tactical with engineering, reducing and increasing weightage over time. As for construction, the fund believes a high interest rate environment is not positive for this sector.
The largest fund in the category, it has a large-cap orientation and dabbles in every sector, barring FMCG, media, infotech and pharma.
TATA INFRASTRUCTURE
What you find here is a huge and diversified portfolio, with a distinct large-cap flavour. Naturally, such a portfolio cannot be expected to deliver astounding returns, but will give investors a good night’s rest and add to their bank balance.
This bent is the result of the fund’s size. In a big fund, the top exposures, by default, have to be in larger stocks. Exposure to mid- and small-caps would have to be done wisely. Hence, the top holdings are large-caps and the tail end of the portfolio is allocated to small-caps. While the fund doesn’t churn the portfolio often, it shifts positions amongst the top 10 stocks.
After an impressive 2006, its returns have been in-line with the category average (slight underperformance in 2009). That was simply because funds with smaller-cap stocks rallied on ahead.
In 2007, this fund increased its exposure to metals, even when the sector was languishing, which paid off as it later gained tremendous momentum. Surprisingly, it got out of construction pretty early in 2007. Had it stayed on in this sector, the returns would have been astounding. In 2008, the fund dropped financials between January and May to increase it later, a move that paid off.
Though its exposure to energy and metals is now more or less in line with the category average, it is pretty bullish on financials. Reasonable valuations, strong growth in corporate banking, and credit growth as corporate capex improves are the reasons to pick this sector. The fund manager looks for strong growth companies, but does so cautiously.
A sound bet and good track record makes it stand out in this space.
| Trailing Returns | |
| Period | Return (%) |
| 3-month | 2.41 |
| 6-month | 4.14 |
| 1-year | 24.73 |
| 3-year | 8.44 |
| 5-year | 24.54 |
| Trailing Returns as on June 23, 2010 | |