Yesterday once more

For most part of their journey, equity funds give lumpy returns - losses stacked together and gains bunched together, often spaced out by many years. One cursory look at the performance of equity infrastructure funds in 2017 makes this amply clear. When the worst-performing fund in a category has given you 27% returns year to date, you know that its been a great year. After a couple of silent years, equity infra funds are back in the reckoning. Let's take a detailed look. Children of bull market During bull markets, fund companies often sell themes. Launched in the previous bull market, i.e., 2004 to 2008, infra funds haven't exactly lived up to the hype surrounding them. From a layman's point of view, infrastructure seems to the easiest way to make money. Who doesn't need more infrastructure in an exploding economy, right? However, the ground reality has been very different. This is because infrastructure, even though an attractive investment area, has been beset with problems that investors didn't anticipate. Funding, huge reliance on government for approvals and debt-laden poor financial outcomes took the sheen away from the sector. Plus, the net asset value losses 2008 and 2011 shook the confidence of investors. The last infra fund was launched in March 2011, an indication of the interest in this theme. As on September 30, 2017, equity infra funds managed over Rs 11,000 crore of investor money. The tide turned in 2014, amid optimism in markets as a new government, led by a decisive leader, took charge. The best fund in 2014 gave almost a 100% profit. In 2014, 60-80% returns was common for somebody who had put money in infra funds. The fizz ended in 2015, as infra funds hardly made any money. As many as 13 out of 22 infra funds posted losses in 2015. The year 2016 was slightly better, but did not have any big-bang returns (the best fund made a little over 16%). One must remember that thematic portfolios don't work like diversified funds since the former contain concentrated bets. This is why thematic funds are suited to investors with high risk appetite and those who can play the waiting game well. On this link, take a look at how infra funds performed in the last six completed calendar years. 2017 a year of salvage In many ways, 2017 has been a year of super liquidity for equity markets. Markets are awash with money, and investors are looking for new ideas to invest. The focus is also back on infrastructure. Financial stocks have done extremely well this year, and this has turbo-charged any infra fund that had good exposure to the sector. Construction, engineering and energy stocks too have performed, thereby ensuring that a standard infrastructure fund portfolio is reasonably placed. Much like 2014, infra funds have therefore made good money for investors who hanged on to them. Both L&T Infrastructure Fund and IDFC Infrastructure Fund have given 50% returns year to date, making them the best in this category. There are numerous funds with returns in the 30-45% zone. In fact, the three worst performing funds this year have given 32.59%, 31.92% and 27.48% return. Here is a look at how infra funds performed across different time-periods this year. Government spending and focused push towards sectors such as roads, railways, housing and power could lead to greater