Top Banking Mutual Funds to invest now in 2016

Top Banking Mutual Funds to invest nowTop Banking Mutual Funds to invest now in 2016


Last week, I have written about the banking sector and how bank stocks have started rising now after a huge fall up to 80% of their prices in the last 6 months to 9 months. While the worst may not be over, we could see some revival in banking stocks prices in the last couple of weeks. If you do not wish to take much risk by investing in those top banking stocks, but want to gain from this rally, you can invest in some of the best banking mutual funds now in 2016. In this article, I would provide some insights about some of the top banking mutual funds to invest in 2016. These are good for short term and medium term perspective.

Also Read: Best Debt Mutual Funds to invest in India by low risk investors

Top Banking Mutual Funds to invest now in 2016


These top Banking mutual funds in India have been analyzed and shortlisted based on below key parameters. Data is as on 13th July 2016.

  • Picked based on highest returns received in the last 5 years.
  • These funds invest only in banking and financial services sector and are very high risk. One has to keep an eye on this sector and in case of any downturn in this sector, one should exit.
  • Ranked based on short term returns too. Since banking stocks took a beating in the last 6 months to 9 months due to RBI NPA provisioning guidelines, we have picked-up the funds which were less downside compared to peers in the last 3 months to 5 years.
  • Since these are sector based funds, Crisil or Value Research Online would give less importance in ranking and they would avoid giving ranking for some of these funds.
  • AUMs (Assets under management) > 100 Crores. This proves investor confidence among these top mutual funds.

Top#1: ICICI Pru Banking and Financial Services Fund


The mutual fund scheme aims to maximize long term capital gains by investing in equity related securities of banking, financial and non-banking financial companies which are forming part of Banking and Financial Services Industry. Huge chunk assets of the mutual fund scheme will be invested in the BSE Bankex Index stocks.

Reasons to invest: This fund gave  18% annualized returns in last 5 years,  25% annualized returns in last 3 years, 8% returns in last 1 year,  28% returns in last 6 months and 27% in last 3 months. This fund gave consistent returns in the short run to long term. If you would have invested Rs 1,000 per month through SIP, in last 5 years, the investment would have been Rs 60,000 and invested value would have grown to Rs 101,000. Value research Online rated this fund as 4-Star (4 out of 5). One of the best the banking mutual fund to invest now.

Top#2: Reliance Banking Fund


The reliance Banking fund scheme aims to generate consistent returns by investing in equity and related and fixed income securities. The proportion of investment between equity and debt will be decided based on the view of the fund manager on anticipated movement in both debts as well as equity markets.

Reasons to invest: This fund gave  12.5% annualized returns in last 5 years,  20% annualized returns in last 3 years, 1% in last 1 year, 18% returns in the last 6 months and 17% in last 3 months. This fund gave consistent returns in the medium term to long term. If you would have invested Rs 1,000 per month through SIP, in last 5 years, the investment would have been Rs 60,000 and invested value would have grown to Rs 94,000. Value research Online rated this fund as 4-Star (4 out of 5). One of the top the banking mutual fund to invest now.

Top#3: Birla Sun Life Banking and Financial Services Fund


This mutual fund scheme has launched just 2.5 years back, however, catching the attention of investors with its superior performance. This mutual fund aims to maximize capital appreciation by investing mainly in equity and related instruments of companies engaged in banking and financial services. This scheme would invest in banks as well as NBFC's, insurance companies, rating agencies, broking companies, etc.

Reasons to invest: This fund gave 23% annualized returns in last 2 years, 14% annualized returns in last 1 year,  27% returns in last 6 months and 21% returns in last 3 months. This fund gave good returns of 30% from inception. If you would have invested Rs 1,000 per month through Systematic Investment Plan (SIP), in last 31 months, the investment would have been Rs 31,000 and invested value would have grown to Rs 42,000. Value research Online has not rated this scheme. One of the good the banking mutual fund to invest now.

Top#4: UTI Banking Sector Fund


This scheme aims to provide capital appreciation by investing in the stocks of companies/institutions engaged in banking and financial services sector.

Reasons to invest: This fund gave  12% annualized returns in last 5 years,  18% annualized returns in last 3 years, 4% in last 1 year,  25% returns in last 6 months and 23% in last 3 months. This fund gave consistent returns in the medium term to long term. If you would have invested Rs 1,000 per month through SIP, in last 5 years, the investment would have been Rs 60,000 and invested value would have grown to Rs 90,000. Value research Online rated this fund as 2-Star (2 out of 5). One of the good banking mutual fund to invest now.

Also Read: Top 10 Mutual funds that can be invested by any investors

Are these any risks involved?


The banking sector was under performing in the last 6 months to 9 months. The main reason is due to provisioning guidelines for NPA by RBI. Most of the banking stocks took beating up to 80% of the stock price. In the last few weeks, we could see the stock prices going up now. Analysts expect that worst is over and banks would start publishing actual financial status from this quarter (Q1) now. Considering all these points, one can invest for short term to medium term in these banking mutual funds. One can hold them for the long term too provided they keep a close watch on these funds.

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Suresh
Top Banking Mutual Funds to invest now in 2016

15 comments

  • Virender Jamwal

    Hi Suresh
    Nice Worli want to speak to you what is the best number to contact you
    Many thanks
    Virender Jamwal

  • Mohit Gupta

    Hi Suresh

    I have one question:

    Lets say I started investing in 1 Mutual with Rs. 5000/month keeping a time horizon of 15 years. But after say 5 years, (my investment becomes 3 Lakh aftre 5 years), I find that the fund is not performing well, e.g. as compare to its peers, or change in Market trends (other category fund performing well ), etc.

    Now as a SIP investor what possible approaches, I can take? I am asking this as fund value invested (3 lakh) is pretty high now, so re-investing via SIP will not make sense, and on the other hand if market is high than Lumpsum also will not make sense. Please suggest?

    • Mohit, I agree with you.You should plan this way 1) Invest in 3-4 mutual fund schemes in category e.g. if you are investing in midcap don’t bet on only one fund, invest in 3-4 schemes. This way, you can get 12% to 15% overall returns in your portfolio.

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