Is This the Right Time to Enter in the Banking and Finance Sector Again?
Are you a banking and financial sector mutual funds’ fan? Have you been investing in them since years but switched out owing to unfavorable conditions? Willing to start investing again but wondering if it is the right time to invest in them again? The expert of MySIPonline is here to clear any doubt that you might be having regarding investing in banking and financial sector funds. Let’s first read what sector funds are.
Table of Content
Sector funds are the open-ended equity schemes that invest in a particular sector. They invest a minimum of 80% of the total assets in equity and equity related instruments of the selected sector. Here, any scheme investing 80% of the total assets in the equity and its related instruments of Banking and Financial Sector will be termed as Banking and Financial Sector Fund.
Why Should You Invest in Banking and Financial Sector Right Now?
Banking and Financial sector is considered as the blood of economy as it is through this channel that financial flow takes place reaching different spaces to keep the economy going. Every economy grows if the banking and financial sectors are properly structured and managed. Since last 2 yrs there were issues related to NPA in the PSU banks, and corporate governance. Thereafter, currently, the sector is facing cash crunches and liquidity problems in addition to the corporate governance issues in NBFCs.
Current and Future Investment Scope
Due to the ongoing factors, the banking and financial sector has been going through the correction phase so far and has given opportunity for value buying. There is also good scope in other industries such as insurance, asset management companies, and other small financial companies. AMFI aims to achieve five times growth in the assets under management reaching up to Rs. 95 lac crores and also three fold growth in the accounts of investors to 130 million by the year 2025.
In addition to this, investors may go for value buying in the PSU as with the improvement in market, it will earn reasonable returns. People may even invest in the private banking companies which have good corporate management, strong earning margins and strong lending in the corporate finance, Small Finance Banks, NBFC focusing on the consumable and small finances.
How the Sector Affects the Related Mutual Funds?
The performance of the sectoral mutual funds depends on how the companies belonging to that sector are performing. For example, if a company is performing well, then the share value increases. Thus, all the schemes that have invested their assets in them will gain and will benefit the investors.
How a company performs, depends on its business strategies, management, and many other factors. Although market may affect the performance, but if the ethics and functioning of the company is strong, then it may lead to good returns, even when the market is low. This is the reason that the companies are carefully selected after going through all the important parameters related to it. A good portfolio selection is a must factor that every investor should check before investing.
Top Banking and Finance Mutual Funds - Risk and Returns
Here are the top five Banking and Financial Mutual Funds with the return that they have generated over different periods of time and the risk that they involve.
SBI Banking and Financial Services Fund (G)
| Return Analysis | ||||||
|---|---|---|---|---|---|---|
| Scheme Name | Last 1 Year | Last 3 Years | ||||
| SBI Banking and Financial Services Fund | 4.36% | 19.23% | ||||
| NIFTY Financial Services TRI | 6.06% | 17.15% | ||||
| Category | -6.90% | 11.71% | ||||
| As on November 13th, 2018 | ||||||
| Risk Analysis | ||||||
|---|---|---|---|---|---|---|
| Scheme Name | SD | Beta | Sharpe | |||
| SBI Banking and Financial Services Fund | 19 | 0.91 | 0.61 | |||
| NIFTY Financial Services TRI | 18.15 | - | 0.51 | |||
| Category | 21.81 | 1.03 | 0.31 | |||
| As on October 31th, 2018 | ||||||
ICICI Pru Banking & Financial Services Fund (G)
| Return Analysis | ||||||
|---|---|---|---|---|---|---|
| Scheme Name | Last 1 Year | Last 3 Years | Last 5 Years | |||
| ICICI Prudential Banking and Financial Services Fund | -5.87% | 17.79% | 22.94% | |||
| NIFTY Financial Services TRI | 6.06% | 17.15% | 20.69% | |||
| Category | -6.90% | 11.71% | 15.87% | |||
| As on November 13th, 2018 | ||||||
| Risk Analysis | ||||||
|---|---|---|---|---|---|---|
| Scheme Name | SD | Beta | Sharpe | |||
| ICICI Prudential Banking and Financial Services Fund | 20.62 | 0.98 | 0.53 | |||
| NIFTY Financial Services TRI | 18.15 | - | 0.51 | |||
| Category | 21.81 | 1.03 | 0.31 | |||
| As on October 31th, 2018 | ||||||
Invesco India Financial Services Fund (G)
| Return Analysis | ||||||
|---|---|---|---|---|---|---|
| Scheme Name | Last 1 Year | Last 3 Years | Last 5 Years | |||
| Invesco India Financial Services Fund | -4.67% | 15.59% | 19.87% | |||
| NIFTY Financial Services TRI | 6.06% | 17.15% | 20.69% | |||
| Category | -6.90% | 11.71% | 15.87% | |||
| As on November 13th, 2018 | ||||||
| Risk Analysis | ||||||
|---|---|---|---|---|---|---|
| Scheme Name | SD | Beta | Sharpe | |||
| Invesco India Financial Services Fund | 17.72 | 0.88 | 0.43 | |||
| NIFTY Financial Services TRI | 18.15 | - | 0.51 | |||
| Category | 21.81 | 1.03 | 0.31 | |||
| As on October 31th, 2018 | ||||||
ABSL Banking & Financial Services Fund (G)
| Return Analysis | ||||||
|---|---|---|---|---|---|---|
| Scheme Name | Last 1 Year | Last 3 Years | ||||
| ABSL Banking and Financial Services Fund | -6.57% | 17.42% | ||||
| NIFTY Financial Services TRI | 6.92% | 17.38% | ||||
| Category | -5.84% | 12.02% | ||||
| As on November 14th, 2018 | ||||||
| Risk Analysis | ||||||
|---|---|---|---|---|---|---|
| Scheme Name | SD | Beta | Sharpe | |||
| ABSL Banking and Financial Services Fund | 22.06 | 1.01 | 0.47 | |||
| NIFTY Financial Services TRI | 18.15 | - | 0.51 | |||
| Category | 21.81 | 1.03 | 0.31 | |||
| As on October 31th, 2018 | ||||||
Reliance Banking Fund (G)
| Return Analysis | ||||||
|---|---|---|---|---|---|---|
| Scheme Name | Last 1 Year | Last 3 Years | Last 5 Years | |||
| Reliance Banking Fund | -1.96% | 14.92% | 20.42% | |||
| NIFTY Bank TRI | 2.97%s | 16.01% | 20.02% | |||
| Category | -5.84% | 12.02% | 15.54% | |||
| As on November 14th, 2018 | ||||||
| Risk Analysis | ||||||
|---|---|---|---|---|---|---|
| Scheme Name | SD | Beta | Sharpe | |||
| Reliance Banking Fund | 19.83 | 0.96 | 0.38 | |||
| NIFTY Bank TRI | 19.32 | - | 0.44 | |||
| Category | 21.81 | 1.03 | 0.31 | |||
| As on October 31th, 2018 | ||||||
Who Should Invest in Banking and Financial Sector Funds?
Every investor has unique investment needs that mainly includes the investment tenure, risk, goal, etc. Below points will help you decide if banking and financial sector schemes are for you.
- Mutual Funds are subject to market risk. No matter which fund is it, there will always be some risk involved. Talking about these funds, they involve high risk on the principal amount invested, and therefore are apt for aggressive investors only.
- Those investors who are interested in investing in the owner’s fund of banking and financial sector companies may add them to their portfolio. These funds help one take advantage of the profits earned by these companies which play an important role in economic development. These funds are best for those who are afraid to invest directly in the stock market but are keen on investing in such companies, as here the investment is diversified, and therefore involves lower risk comparatively.
- Since these funds predominantly invest in the equity and equity related instruments, therefore it is suggested that the investors should park their money for a long-term tenure. Those with long-term financial goals may consider adding these funds to their investment portfolio.
Invest in the Best Mutual Funds
- 100% Paperless
- No Transaction Charges
- Easy to Invest
- Safe & Secure
Conclusion
With the correction phase going on in the mid cap and small cap space, investors are doubtful whether or not to invest in the equity funds. The expert believe that this is the time for you to make additional purchase, as the units are available at low NAV. When the market improves, an investor will be able to earn high returns on these units. As you have already read about what Banking and Financial sector holds, hope you now know whether or not to invest in these sectoral funds. If there is anything that you need to discuss, feel free to consult the financial experts. You may also get a regular fund related query answered by posting the same here.
Must Read:
What Is the Best Time to Invest in Mutual Funds?
Best Lump Sum Investment Approach to Avail Maximum Benefit
Top 3 IT Sector Funds to Invest in Right Now
NFO Launched: DSP Healthcare Fund
