Mutual funds focused on information technology have seen a drop in popularity in India recently, while funds focused on infrastructure have been among the best performers, according to Daily News & Analysis.
The best-performing funds include Reliance Diversified Power Fund, JM Basic, ICICI Prudential Infrastructure Fund and JM Financial Services Sector Fund, based on one-year returns.
"These sector funds have gained not just from the upside witnessed by existing stocks but also from the initial public offerings in the specific sector entering the market," said Nipun Mehta, co-founder and chief executive officer of Unitis Tower Wealth Advisors.
The worst-performing funds this year include Franklin Infotech Fund, UTI Growth Sector Fund-Software, UTI Thematic Auto Fund and SBI Magnum Sector Umbrella-Pharma Fund.
Mehta said unpredictable changes, like a rise in raw mineral prices, can change performance and demand. Specific sectors and themes are also likely to outperform the overall market, he said.
"I am not sure whether the sectors that are today underperforming will outperform in the time to come," he said. "It is not necessary that IT, which is beaten down, will suddenly outperform. However, there would be more new fund offerings in the sector funds space."
Sanjay Sinha, chief investment officer of SBI Mutual Fund, noted that IT funds were doing well in 2005, but have lost favor to other funds with a broader diversity in technology.
