SBI Mutual Fund has come up with new fund -Banking and Financial Services fund – which will invest predominantly in stocks related to banking and Financial sector like Public sector / Private sector banks,NBFCs ,insurance companies etc.
New fund offer has opened on Feb 11, 2015 and will close on Feb 24, 2015.
This is will be sectoral type of fund and performance will depend more on banking and financial sector stocks.
Why One Can Invest in Banking Sector :
- High household saving rate:India has biggest saving rate after China and large portion of saving goes to banks.New initiatives like Jan Dhan yojana or direct cash transfer will result in more saving in future.
- Banking and Financial sector fund forms biggest part of total market capitalization.Banking stocks constitutes about 22% of NIFTY capitalization.
- Current scenario of easing inflation rate and trending down interest rates can result in higher credit growth in future which can beneficial to banking sector.
- Higher foreign investment in insurance sector likely to help insurance sector to grow more in future.
Ongoing Banking Funds :
| Fund Name | Starting NAV | NAV as on Feb 14, 2015 | Inception Date | Returns since inception CAGR |
| Reliance Banking fund | 10 | 187 | May 2003 | 28.41% |
| UTI Banking Fund | 10 | 69.79 | Apr 2004 | 19.59% |
| Sahara Banking Fund | 10 | 48.74 | Sept 2008 | 28.01% |
| ICICI Pru Banking & Financial Services Fund | 10 | 38.57 | Aug-2008 | 23.15 |
| Religare Invesco Banking fund | 10 | 36.30 | July 208 | 21.61% |
| Sundaram Financial Services Opportunities Fund | 10 | 30.32 | June 2008 | 18.06% |
| Taurus Banking & Financial Services Fund | 10 | 18.54 | May 2012 | 25.36% |
| Baroda Pioneer Banking And Financial Services fund | 10 | 16.97 | June 2012 | 22.12% |
| Birla Sunlife Banking & Financial Services Fund | 10 | 17.45 | Dec 2013 | 60.24% |
Funds launched at different dates and returns are from since launch…Reliance banking fund have provided returns of 28% CAGR since inception is the oldest fund in this category while BSL banking fund is the latest fund launched in 2013 ..as all funds have launched at different dates ..so returns will be different.(e.g 28% returns of Reliance banking Fund and 60% returns of BSL banking fund are not comparable as launch dates are different)
If economy improves further,banking sector will an obvious gainer.But one should remember than this fund is sector fund and carries high risk as well.
