The Nifty Transportation & Logistics Index has outperformed major indices for eight of the last 11 years and has underperformed for the last three years, making it a good entry point.
The UTI Transportation and Logistics Fund, the only actively managed fund in the space, was one of the best-performing stock funds over the past year, up 11.2%, compared to the Nifty 50, which fell 3.4%. New fund offerings (NFOs) from
The Transport and Logistics Fund and the Transport and Logistics Fund were launched. They close on October 18th and 20th.
The auto sector has underperformed broader markets over the past five years, with the S&P BSE Auto Index gaining 2.81% compared to the S&P BSE Sensex, which was up 12.35%. Over the past year, the S&P BSE Auto Index is up 8.79%, compared to the S&P BSE Senex, which is down 4.72%.
Fund managers believe the current uptrend in the auto sector is just the beginning of the rally.
“It is estimated that the auto sector will post the highest earnings growth among its peers over the next two years, driven by a strong demand-led cyclical recovery. The resulting operational leverage and lower commodity prices should lead to margin improvement, thereby providing visibility for strong earnings growth in the transportation and logistics sector,” said Daylynn Pinto, fund manager of IDFC MF.
“Auto has a positive correlation to GDP growth. As the economy recovers, the sector should see more pent-up demand and replacements. Industry-specific issues such as chip shortages, emissions standard changes, increases in insurance costs, etc. are also behind us and commodity prices are also softening,” said Harish Bihani, Senior Fund Manager, ICICI Prudential MF.
Financial planners believe that for thematic funds that experience strong reversals, investors could choose a flat allocation of 5-10% of their portfolio. In addition, as this is a thematic fund, the portfolios of all programs could overlap.
Investors could choose UTI Transportation and Logistics, which has an 18-year track record, and wait for the IDFC and ICICI funds to build a track record, said Rupesh Bhansali, Head (Sales) of GEPL Capital.
https://economictimes.indiatimes.com/markets/stocks/news/auto-at-cusp-of-a-rebound-makes-logistics-a-good-turnaround-bet/articleshow/94929518.cms Auto: Auto at cusp of a rebound makes logistics a good turnaround bet