Analysis showed that out of the 18 funds operating in this category, 15 funds have offered negative returns and only three schemes gave positive returns.
LIC MF Banking & Financial Services Fund has lost the most at around 5.31% year-to-date (YTD) so far. Meanwhile, Tata Banking & Financial Services Fund has lost around 5.28%.
Six schemes have lost around 3% so far this year while other six schemes have lost 2%.
Ace performers in the category
Three banking funds managed to offer positive returns on a YTD basis. Quant BFSI Fund, the topper in the category, offering 10.99%. Bandhan Financial Services Fund gave 1.37% and Invesco India Financial Services Fund gave 0.41%.
“Deposit mobilization remains a key lever to support a bank’s superior credit growth. The recent announcement of an increase in risk weight for unsecured lending categories of personal loans and credit card receivables could potentially slow down growth in these segments in the near term. Currently, no major asset quality challenges appear. Thus, credit cost trends should not look worrisome in FY24, thereby supporting earnings. We believe in banks’ ability to deliver healthy earnings growth, largely supported by benign credit costs, while margin headwinds continue,” said a report by Axis Securities.“The outlook on the asset quality is encouraging. Slippages are expected to moderate and recoveries are to remain healthy, which will improve asset quality further across the sector. Current valuations are very attractive as compared to the market. Hence, we maintain the overweight stance on the sector,” the report added.
ETMutualFunds also compared the performance of these 18 schemes with their respective benchmarks. Fifteen mutual fund schemes that gave negative returns managed to outperform their benchmarks despite being in the red. The other three schemes also managed to outperform their respective benchmarks.
During the period, Nifty Bank TRI, Nifty Financial Services TRI, and S&P BSE BANKEX – TRI fell over 7%.
“Banking as a sector has not done very well for investors for the last two years. But I still feel that it has good potential if one takes a two-year perspective,” says Janakiraman Rengaraju, CIO, Franklin Templeton India.
For the purpose of this study, ET Mutual Funds considered all banking funds that have completed one year in the market. We considered regular and growth options.
Note, the above exercise is not a recommendation. The exercise was done to find how banking funds performed on a year-to-date basis.
One should refrain from making investment or redemption decisions based on the above exercise. One should always consider risk appetite, investment horizon, and goals before making investment decisions.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
