Best Banking Mutual Funds to invest in 2020 – During Stock Market Corrections

Top and Best Banking Sector Mutual Funds to invest in 2020 IndiaBest Banking Mutual Funds to invest in 2020 in India


We are seeing a huge stock market correction now. While there are enormous opportunities to invest in individual stocks, investors are confused whether it is right time to invest in stocks or wait for some more time. Mutual Fund investors are still checking their funds NAVs, which are falling day by day. One of my favorite sectors, i.e. banking sector has seen a huge correction now. In the medium to long term, banking sector can take faster U turn. In this article, I would recommend some of the best banking and financial mutual funds to invest in 2020 which could be the best bet in the medium to long term.

Also Read: Who should exit from Mutual Funds from this stock market crash?

What are Banking Sector Mutual Funds?


In simple term banking funds invests in banking and financial services companies in India. Banking and financial services are the backbone of India’s economic growth. I keep saying that this is evergreen sector where investors should invest some of their portfolio.

Why Banking sector is attractive bet?


You might think whether “is it good to invest in banking mutual funds”. Here are some key positive factors to invest in the banking sector.

1) High Growth and Performance: This sector has been evergreen in the medium to long term. Let us look at the analysis of banking sector mutual funds here. This sector funds gave:

Up to 46% returns in 2010

up to 70% returns in 2012 and 2014

up to 50% returns in 2017

up to 26% returns in 2019

2) Bright Future for Banking and financial services industry: As per IBEF report, Indian banking industry consists of 20 public sector banks, 22 private sector banks, 44 foreign banks, 44 regional rural banks, 1,542 urban cooperative banks and 94,384 rural cooperative banks. Beyond this there are several financial services companies. This creates a whole big world of universe for banking and financial services where one invest in listed companies.

The list goes on……

Best Banking Mutual Funds to invest in 2020 – During Stock Market Corrections


Here is the list of some of the best banking sector mutual funds in India that can be invested in 2020 during stock market corrections.

1) SBI Banking & Financial Services Fund

2) Invesco India Financial Services Fund

3) ICICI Prudential Banking and Financial Services Fund

4) Aditya Birla Sun Life Banking & Financial Services Fund

5) Sundaram Financial Services Opportunities Fund

6) Nippon India Banking Fund

7) UTI Banking and Financial Services Fund

Top Performing Banking Mutual Funds – Short Term Performance


Now let us look at the short term performance of these Banking Funds. If you observe, banking and financial services stocks have taken a huge beating in the last 4 to 6 weeks. Some of the mutual funds returns are dropped now up to 48% in the last 3 months. Hence you would see minus / Negative returns in below table

Top Performing Banking Mutual Funds – Medium to Long Term Performance


Now let us look at medium to long term performance of these mutual funds.

Best Banking Mutual Funds to invest in 2020 – During Stock Market Corrections


Now let us go into detail about these funds.

1) SBI Banking & Financial Services Fund


The scheme investment objective is to generate long-term capital appreciation from a portfolio of equity and equity related securities of companies engaged in banking and financial services.

When banking sector has fallen by 46% in the last 3 months, this fund has fallen by only 41% indicating better performance compared to benchmark. Its beta is low at 0.82 (lower beta provides cushion during downside).

When entire sector returns have been wiped out in the last 5 years due to stock market correction and in negative, this fund is able to generate positive annualized returns of 4%. One of the best banking and financial services mutual funds for 2020.

2) Invesco India Financial Services Fund


This funds objective is to generate capital appreciation from a portfolio of equity and equity related instruments of companies engaged in the business of banking and financial services.

When banking sector has fallen by 46% in the last 3 months, this fund has fallen by only 40% indicating better performance compared to benchmark. Its beta is low at 0.82 (lower beta provides cushion during downside). One should always look for low beta mutual fund schemes.

When entire sector returns have been wiped out in the last 5 years due to stock market correction and in negative, this fund is able to generate positive annualized returns of 2%. One of the best financial mutual funds to invest now in 2020 post correction.

3) ICICI Prudential Banking and Financial Services Fund


The MF scheme aims to maximize long term capital gains by investing in equity and equity related securities of banking, financial and non-banking financial companies that form a part of Banking and Financial Services Industry. A large share of the assets of the scheme will be invested in the stocks comprising the benchmark, BSE Bankex Index.

When banking sector has fallen by 46% in the last 3 months, this fund has fallen by only 41% indicating better performance compared to benchmark. Its beta is low at 0.94 (lower beta provides cushion during downside).

During this stock market correction, this fund is able to generate positive annualized returns of 1%. One of the top performing banking mutual fund to invest now in 2020 post correction.

4) Aditya Birla Sun Life Banking & Financial Services Fund


This fund objective is long term capital appreciation by investing primarily in equity & equity related securities of companies engaged in banking & financial services. The scheme would invest in banks as well as NBFC’s, insurance companies, rating agencies, broking companies, etc.

Even this fund is able to beat the benchmark and has a low beta of 0.94.

5) Sundaram Financial Services Opportunities Fund


The MF scheme aims for long-term capital appreciation by investing predominantly in equity and equity related securities of Indian companies engaged in the banking and financial services.

This fund was able to beat its benchmark, however, it has minor negative returns in the last 5 years. It has low beta of 0.86.

6) Nippon India Banking Fund


The scheme aims to generate continuous returns by actively investing in equity, equity related or fixed income securities of banks. 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.

This fund was able to beat its benchmark, however, it has minor negative returns in the last 5 years. Its beta is 0.97.

This is one of the best banking mutual funds to invest in India.

7) UTI Banking and Financial Services Fund


The fund aims to generate long term capital appreciation by investing predominantly in equity and equity related securities of companies/institutions engaged in the banking and financial services activities.

This fund performed inline with benchmark, however, it has negative annualized returns of 4% in the last 5 years. Its beta is 0.96.

Who can invest in Banking and Financial Services Mutual Funds?


Banking mutual funds invest in one sector. Hence, these are high risk. If you are a high risk investor and willing to invest in sector mutual fund schemes, you can invest in these schemes.

Should I invest through lumpsum or SIP in these banking funds?


Since banking funds have fallen due to huge correction, one can invest in lump sum investments now to take advantage of low NAV. You can also create short term mutual funds SIP plan to invest in such sector mutual funds.

Should you invest in banking funds when stock markets are taking huge correction?


Stock markets are taking huge correction. No one knows where is the bottom of such correction. If you have some surplus money and willing to invest for 2-5 years, you can invest in these funds. Remember, no one knows the bottom of this correction. Hence, once you invest, if you see fall in NAV prices, don’t get scared. The majority of the banking mutual funds NAV has fallen up to 50% in the last 6-8 weeks and such fall may continue for a few more weeks. These may also take U turn once some one announces “we found medicine for corona virus” or someone like South Korea says “we have better managed corona virus and learn from us”.

However, if you are among one of the investor who gets scared for fall-in share market by another 5,000 points in the future, better avoid these funds.

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Suresh KP

Best Banking Mutual Funds to invest in 2020 – During Stock Market Corrections

Suresh KP

3 comments

  • san pietersen

    Hello…. Thanx for guidance. Such a nice information. I also done some investment in JM Finance is the top investment banks in India.

  • Arun kesar

    Sir m investing in
    1. axis long term equity fund regular plan(G) and
    2. nippon india tax saver elss fund (G) through sip should i continue with these funds or exit from these funds

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