Is SBI PSU Fund Safe in 2025? Read Expert's Review

Introducing you to one of the top performers in the PSU category, the SBI PSU Fund, which has been around since 2010, and has now seen its NAV hit Rs 34.79, backed by a strong 5-year performance.

But here’s the big question on every investor’s mind: "What’s driving the SBI PSU Fund’s NAV to climb so sharply?"

The PSU funds are seen as slow movers, heavily dependent on government policies. However, the SBI PSU Fund has managed to shatter this stereotype, now having an AUM of Rs 5,427 Crore, fuelled by strong PSU reforms and a renewed focus on infrastructure growth.

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What is the 5-Year Rolling Return of SBI PSU Fund?

Let’s check the rolling return to see how consistently the fund has performed over different time frames.

The SBI PSU Fund has delivered strong returns at times, but it has not consistently outperformed its benchmark Nifty CPSE TRI. This raises a common question: " What is the return rate of SBI PSU Fund over the long term?” To answer that, we need to look at the graph below.       

 

In the above graph, the 3-year return of 8.23% is close to the benchmark, the 5-year return of 6.74% is slightly better. Consistency levels are close to the benchmark, indicating that the fund can perform well, but not in every phase.

The SIP returns give a more impressive picture. Over 5 years, the SBI PSU Fund has delivered 28.93% SIP returns, beating both the category average of 28.11% and the NIFTY 50 TRI o f 14.24% by a great margin. SBI PSU Fund ranks among the top in its category when we look at SIP performance.

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Next, let’s dive into the SBI PSU Fund investment strategy.

SBI PSU Fund Investment Strategy

Besides the consistent returns of SBI PSU Fund, there is an investment strategy that follows a growth-oriented sectoral strategy for long-term capital appreciation.

It invests in equity of Public Sector Undertakings (PSUs) and their subsidiaries, along with select debt instruments from PSUs for balance.

There PSU-focused thematic approach makes this fund more interesting, which targets companies with strong government support & stable cash flows, like Oil and Natural Gas Corporation (ONGC) and Bharat Electronics Limited (BEL) that spread over infrastructure, energy and financial sectors.

However, the SBI Mutual Fund not only sticks to large companies. It balances large cap stability with selective mid and small cap PSU MF and it can tap potential from PSU reforms and capital expenditure (capex) cycles.

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Well, this raises the question “Who is the mastermind behind of SBI PSU Fund?”

Who is the Mastermind Behind SBI PSU Fund?

The fund is managed by Mr. Rohit Shimpi, who took charge in 2018. His expertise became even more active during the post-2020 economic recovery, where his strategic decisions led the fund to benefit from PSU reforms and growth in the infrastructure and energy sectors.

Many investors often wonder, “Is the fund manager good enough to drive consistent performance?” In this case, Mr. Shimpi follows a top-down and bottom-up research process.

The top-down approach verifies macro trends such as government policies, infrastructure spending and energy transitions. On the other hand, the bottom-up approach selects companies with strong fundamentals, low debt, revenue growth and operational efficiency.

This MF follows a highly PSU-focused strategy that is built on diversification that captures government-driven PSU growth while managing risks through selective and focused investments.

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Moving on to the next heading, SBI PSU Fund Portfolio Review 2025, with its allocation.

SBI PSU Fund Portfolio Review 2025 with Asset and Market Allocation

The SBI PSU direct plan growth continues to hold a strong, focused portfolio in line with its PSU theme. The fund continues to maintain a high conviction in line with its thematic investment strategy.

In terms of asset allocation of July 2025, the fund has 95.33% in domestic PSU equities, a very small 0.09% in debt, and 4.58% in cash and cash equivalents. This shows it is heavily equity-focused while keeping some liquidity to grab market opportunities.       

Now look at the market capitalization allocation, the fund invests primarily in large-cap PSU companies (82.88%), such as State Bank of India and NTPC, which provide stability and strong fundamentals and cash flows. The remaining 17.12% is in mid-cap PSU stocks, which adds growth potential, with some volatility. It has a relatively lower allocation towards small cap stocks. Look at the chart below for visual data:       

      

This balanced mix of large cap stability and mid cap growth is essential for long-term wealth creation, especially in a very high-risk category like PSU equity funds. This shows diversified sector allocation and strong fundamentals that help manage risks, even while focusing on a single theme.

Moving forward, the Sector Allocation of the SBI PSU Fund to see which industries drive its growth.

What is the Sector Allocation of SBI PSU Fund?

In 2025, the SBI Mutual Fund mainly invests in sectors such as energy & utilities, financial services, industrials, and materials. It has a higher allocation to financial services 34.3% vs 22.06% category average and materials, showing a strong focus on banking and capital goods PSUs.

Taking you a step closer, let's see the distribution of assets in SBI PSU Mutual Fund:

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Next, explore the Top Holdings of SBI PSU Fund and how they shape the fund’s performance.

Top Holdings of SBI PSU Fund

The top five holdings, State Bank of India, Bharat Electronics, GAIL India, Power Grid Corp and NTPC, make up nearly 48% of the portfolio. This fund shows benefits from sector trends and government actions, ensuring strong returns.

This high-conviction PSU strategy balances selective diversification with investments in undervalued, fundamentally strong companies across sectors like infrastructure, energy and banking.

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Now, let's peel back the layers of this myth and see that this Fund truly stands as a good choice for long-term investments.

Is SBI PSU Fund Good for Long Term Investment?

Although SBI PSU Fund carries a higher risk due to its sector-focused nature, the strong stock quality makes it a worthy consideration for long-term investors.

As shown in the table below, SBI PSU Fund’s lower P/E 11.36 shows better value and its strong earnings of 8.91% with sales growth of 9.27% show long-term potential, even though cash flow growth of -10.13% needs to be tracked.

Fundamental Ratios	Value
Sales Growth	9.27
Earning Growth	8.91
Cash Flow	-10.13
PE-Valuations	11.36

The strategy involves limited but high-quality stock selection spread across different industries with growth margins & reasonable price-to-earnings (PE) ratios, which balances risk and opportunity. This focused approach has been the key to its performance.

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Now, let us wrap up with key takeaways from this SBI PSU Fund Review.

To Conclude SBI PSU Fund Review 2025

To wrap up, the SBI PSU Fund stands out in Mutual Funds with its sector-focused approach, strategy & quality PSU stock holdings. Attractive valuations, consistent earnings and a balanced asset allocation make it a smart option for long-term investors.

However, as a thematic mutual fund, it carries higher risk. It requires strategic entry and exit to maximize gains & may not be ideal for regular SIP investments. Investors should know their risk capability and suitability with their long-term financial goal before investing.

Frequently Asked Questions

1. Why is the SBI PSU Fund NAV rising?

The SBI PSU fund NAV is rising due to driven by PSU reforms, infrastructure push & improved PSU valuations.

2. Is SBI PSU Fund safe to invest in?

It is moderate to high risk due to sector focus but backed by government-owned companies.

3. Who should invest in SBI PSU Fund?

Investors with a long-term 5+ year horizon and a belief in the PSU sector growth.

4. How to invest in PSU Mutual Fund?

Through the SBI MF website, distributors, banks, or online platforms via SIP or lumpsum.

5. What are the risks to consider?

There is sector concentration, policy changes and market volatility that are the major risk factors.

6. Will the fund continue to perform?

It seems to be continuing to perform as it has PSU reforms & infrastructure growth sustained.