PSU Funds offer 89.25% in one year; top return chart

PSU theme based mutual funds have offered an average return of around 89.25% in a one-year horizon, an analysis of performance showed. The category offered the highest return in one year horizon.

The category tops the return chart, not only in thematic fund/sectoral fund category, but also managed to outperform other equity oriented categories

There were around five schemes in the PSU fund category that have completed one year of existence in the market.
CPSE ETF, the topper in the category, offered 109.33% in one year horizon. Aditya Birla Sun Life PSU Equity Fund gave around 97.01% in one year. SBI PSU Fund offered 92.52% during the same time period.

Invesco India PSU Equity Fund, the oldest scheme in the category, offered 84.22% in one year horizon. The scheme has completed around 14.23 years of existence in the market.

During the one year horizon, the PSU stocks also moved in upward trajectory. Around five PSU stocks went up by more than 300%. The other top gainers went up between 190-268% in one year.
The PSU funds are benchmarked against Nifty CPSE – TRI and S&P BSE PSU – TRI. Nifty CPSE – TRI and S&P BSE PSU – TRI offered around 110.22% and 100.67% respectively in one-year horizon.
The PSU theme based funds offered the highest return in a three month and three year horizon as well. In the three month horizon, the category offered 44.07% return. In the three year period, the category offered 41.74%.

PSU funds are thematic funds that invest in stocks of public sector undertakings or PSUs. These companies are government-owned. So they are influenced by government policies on sectors they are operating.

You should invest in these schemes only if you have a long investment horizon or have intimate knowledge about the sector to time the entry and exit in these schemes. Remember, every sector or theme can go out of fashion depending on the economic conditions. You should not make hasty decisions in those phases.

Note, the above exercise is not a recommendation. The purpose of this exercise was to find how PSU funds fared in one year horizon. One should not make investment or redemption decisions based on the above exercise.

One should always make investment decisions based on goals, risk appetite, and investment horizon.