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5 Best Banking Mutual Funds SIP To Invest In India 2021

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Open-ended equity funds that invest in banking stocks are known as banking funds. There are special sector funds that only invest in the banking industry and nothing else. Best Sectoral Banking Funds are equity mutual funds that invest primarily in Indian bank equity and equity-linked securities. When the banking sector is doing well, these funds are supposed to do well and beat the benchmark. You gain exposure to a well-diversified portfolio of banking securities by investing in these funds. AUM, or Asset Under Management, is the cumulative value of a Mutual Fund scheme's assets. For example, the AUM of an equity mutual fund is the cumulative value of the equity securities in its portfolio plus any other asset it might have invested in. Rather than relying solely on the AUM, investors should consider a number of other variables that have a greater effect on a mutual fund's results.

 

Who should invest in Banking Mutual Funds?

Who should invest in Banking Mutual Funds?

Due to the fact that sectoral baking funds are sector funds, they have a higher concentration risk than any other form of mutual fund. As a result, sectoral banking funds are appropriate for investors who are willing to take on more risk in exchange for the chance to outperform the market while the banking sector is performing well. To mitigate the associated risks to a greater degree, a long-term investment horizon is needed. Investing in these funds allows you to gain exposure to a portfolio of the best-performing banking stocks. Due to a lack of diversification, if the sector faces difficulties, so will the investments. Since the banking and finance sector is regarded as one of the country's backbones, it will contribute to the country's growth, especially if the government supports the sector.

SBI Banking & Financial Services Fund
 

SBI Banking & Financial Services Fund

The fund has a 5 Star rating from Value Research Online. The fund's expense ratio is 0.91 percent, which is lower than the expense ratios charged by most other Sectoral-Banking funds. The fund's top 5 holdings are in HDFC Bank Ltd., ICICI Bank Ltd., Axis Bank Ltd., State Bank of India, Kotak Mahindra Bank Ltd. The NAV of the fund is Rs 24.39. The AUM of SBI Banking & Financial Services Fund is Rs 2,401 Crores. The minimum SIP amount is Rs 500 for the fund. The funds first year return is 87.39%, while 5 year return is 19.95%. If a person has invested Rs 500 in SIP one year back, the return as of now would be Rs 81,325 which is 87.4%.

Invesco India Financial Services Fund

Invesco India Financial Services Fund

Invesco India Financial Services Fund Direct-Growth had 36841 Crores in assets under management (AUM), making it a medium-sized fund in its group. The fund's expense ratio is 1.18 percent, which is comparable to the expense ratios charged by most other Sectoral-Banking funds. The 1-year returns on Invesco India Financial Services Fund Direct-Growth are 80.05 percent. It has produced an average annual return of 15.16 percent since its inception. Every five years, the fund has doubled the capital invested in it.

If a person has invested Rs 10,000 of monthly SIP for 5 years - The returns would have been Rs 8.84 lakh. If the same amount was invested in bank FD, your returns would be Rs 7.16 lakh (7.18%). The fund has a 4 Star rating from Value Research Online.

Sundaram Fin Services Opp Reg

Sundaram Fin Services Opp Reg

Sundaram Financial Services Opportunities Fund Direct-Growth returns were 84.51 percent in the previous year. It has returned an average of 13.92 percent per year since its inception. Every five years, the fund has doubled the capital invested in it. HDFC Bank Ltd., ICICI Bank Ltd., Housing Development Finance Corpn. Ltd., Axis Bank Ltd., and State Bank of India are the fund's top five holdings. The AUM is low at Rs 333 Crore and NAV stands at Rs 54.3. The minimum SIP for the fund is Rs 100. The expense ratio for the fund is high at 2.64%.

Tata Banking & Fin Services

Tata Banking & Fin Services

The last one-year returns on the Tata Banking and Financial Services Fund Direct-Growth are 75.22 percent. It has produced an average annual return of 20.06 percent since its inception. Every five years, the fund has doubled the capital invested in it. The fund's top 5 holdings are in HDFC Bank Ltd., ICICI Bank Ltd., Housing Development Finance Corpn. Ltd., Axis Bank Ltd., Kotak Mahindra Bank Ltd.. The fund has an expense ratio of 1.03%, which is less than what most other Sectoral-Banking funds charge. The NAV of the fund is Rs 25.94 and AUM stands at Rs 683 crores. The minim amount for SIP is Rs 500. The fund has 4 Star rating from Valueresearch Online.

Aditya Birla Sun Life Banking & Financial Services Fund

Aditya Birla Sun Life Banking & Financial Services Fund

Aditya Birla Sun Life Banking & Financial Services Fund Direct-Growth returns have been 95.97 percent over the last year. It has produced an average annual return of 19.23% since its inception. Every two years, the fund has doubled the capital invested in it. The fund's top 5 holdings are in ICICI Bank Ltd., HDFC Bank Ltd., State Bank of India, Axis Bank Ltd., Bajaj Finance Ltd..

The fund's expense ratio is 1.19 percent, which is comparable to the expense ratios charged by most other Sectoral-Banking funds.

Conclusion

Conclusion

Investing in sector funds is a good idea. They will raise an investor's portfolio returns if they are paced correctly. Before investing in these, it's a good idea to learn about the business, how they fit into the portfolio, and how much sector exposure is appropriate.

Sector funds are a high-risk investment. Since sector funds are focused on a single industry and have a smaller number of stocks, they are more risky than a diversified equity mutual fund. Due to the high risk, financial advisors recommend that investors allocate no more than 5-10% of their portfolio to sectoral funds.

5 Best Banking Funds SIP To Invest In India 2021

5 Best Banking Funds SIP To Invest In India 2021

5 Best Banking Funds SIP To Invest In India 2021

Banking Mutual Funds 1 Year Return 5 Years Return Expense ratio
SBI Banking & Financial Services Fund 83.11% 20.01% 0.91%
Tata Banking and Financial Services Fund 71.13% 19.5% 1.03%
Invesco India Financial Services Fund 74.97% 18.25% 1.18%
Sundaram Fin Services Opp Reg 81.58% 16.63% 2.16%
Aditya Birla Sun Life Banking & Financial Services Fund 92.4% 15.83% 1.19%

Read more about: mutual funds banking investment
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