Top mutual fund schemes that have a higher allocation in railway stocks

India’s railway system is poised for significant growth and is driven by a government keen on upgrading infrastructure. A new production-linked incentive (PLI) scheme for train component manufacturers and an order for 1.54 million forged wheels reflect efforts to reduce import dependence and attract international manufacturers.

The Union Budget 2024 allocates a record ₹2.4 lakh crore for Indian Railways, focusing on infrastructure projects like track doubling, gauge conversion, and electrification. Sustainability initiatives aim for 100% broad-gauge network electrification by 2030, powered by solar energy, and improved sanitation with bio-toilets. The sector is set for significant advancements, with 41 Vande Bharat trains running and foreign direct investment (FDI) opening up.

Indian railway stocks, including Indian Railway Catering & Tourism Corporation (IRCTC), Indian Railway Finance Corporation (IRFC), BEML Ltd., and others, have shown resilience due to these government initiatives. The railway network is expanding, carrying 24 million passengers daily and 203.88 million tonnes of freight. The industry is recovering post-pandemic, with a revenue of ₹2.40 lakh crore in FY24.

Significant investments in rail infrastructure, estimated at ₹50 lakh crore by 2030, and 100% FDI allowance signal growth opportunities. Investing in railway stocks through mutual funds can offer stability and growth in this promising sector. Following are some major mutual fund schemes that have a higher allocation (more than 2% of AUM in Portfolio to railway stocks:

Canara Robeco Manufacturing Fund: This fund has a significant allocation to large-caps at 45.71%, mid-caps at 22.98%, and small-caps at 26.89%. It also allocates 4.42% to other segments. It has a specific 2.31% allocation to Titagarh Rail Systems Ltd.

Invesco India Focused Fund: With a large-cap focus of 59.43%, this fund also invests in mid-caps (22.46%) and small caps (12.68%), with 5.43% in other categories. It has a 2.91% allocation in BEML Ltd.

Invesco India Infrastructure Fund: This fund has a substantial large-cap allocation of 42.21%, along with mid-caps of 31.69% and small caps of 21.14%. It allocates to specific railway stocks such as IRCTC (3.39%), IRFC (1.96%), and CONCOR (2.22%). Invesco India PSU Equity Fund: Predominantly invested in large caps (71.47%), with mid-caps (17.05%) and small caps (8.01%), this fund also allocates to railway stocks like IRCTC (3.40%), IRFC (4.06%), and others.

JM ELSS Tax Saver Fund: This fund is heavily invested in small caps (36.82%), with large caps (39.11%) and mid-caps (23.76%). It also includes railway stocks such as IRCTC (2.07%).

JM Value Fund: This fund focuses heavily on small caps (51.56%) but also invests in large caps (26.53%) and mid-caps (21.28%). It holds railway stocks like IRCTC (2.65%).

Quant Business Cycle Fund: This fund balances large caps (48.79%) with mid-caps (16.76%) and small caps (25.52%). It includes railway stocks like CONCOR (2.86%). Quant Infrastructure Fund: Balanced across large caps (48.11%), mid-caps (11.66%), and small caps (30.58%), with allocations to railway stock CONCOR (3.63%).

Quant Large and Mid-Cap Fund: This fund emphasises large caps (54.82%), mid-caps (26.36%), and small caps (8.48%), with a notable allocation to railway stock, including Titagarh Rail Systems (5.82%).

Quant Manufacturing Fund: Balanced across large caps (39.78%), mid-caps (19.23%), and small caps (34.91%), this fund also includes railway stock Titagarh Rail Systems (2.55%).

Quant Mid Cap Fund: With significant investments in mid-caps (45.62%) and small caps (5.2%), alongside large caps (42.88%), it allocates to railway stock Railtel Corporation of India (7.47%).

Quant Momentum Fund: This fund is diversified across large caps (37.24%), mid-caps (22.26%), small caps (24.15%), and other categories (16.35%), with allocations to railway stock like IRCTC (5.13%).

Quant PSU Fund: Balanced across large caps (41.12%), mid-caps (23.65%), and small caps (26.68%), this fund invests in railway stocks like IRCTC (7.12%) and IRFC (7.26%).

Quant Quantamental Fund: Predominantly invested in large caps (65.5%) and other categories (18.94%), with smaller allocations to mid-caps (14.7%) and railway stock IRCTC (5.51%).

Quant Small Cap Fund: This fund focuses on small caps (57.56%), with smaller allocations to large caps (31.15%) and mid-caps (9.46%). It also includes railway stocks such as Railtel Corporation of India (1.61%).

Quant Value Fund: Balanced across large caps (51.55%), mid-caps (11.07%), and small caps (26.99%), with allocations to railway stocks like Railtel Corporation of India (5.97%).

Samco Active Momentum Fund: Primarily invested in small caps (48.15%), with allocations to large caps (28.2%) and mid-caps (18.23%). It also includes railway stock CONCOR (2.07%).

Tata Dividend Yield Fund: This fund is focused on large caps (51.53%) and mid-caps (20.85%), with smaller allocations to small caps (23.75%) and railway stocks IRCTC (2.58%).

UTI Infrastructure Fund: This fund focuses on large-cap stocks (63.26%) but also invests in mid-caps (14.93%) and small-caps (17.19%). It allocates to railway stocks CONCOR (2.09%).

Conclusion

Investors can leverage mutual funds focused on railway stocks to benefit from India's ambitious railway modernisation plans, supported by substantial government funding and infrastructure upgrades.