Top 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
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Dear Suresh, I have different SIPS for past 3 odd years and also in between i have made lumpsum investments . So if i want to calculate the returns % have achieved till now from the inception (cumulative) , is there any returns calculator which can be used .Thanks
difficult as you have made multiple investments either thru SIP and thru lumpsum.
If you know the date of the first sip then u can add it on money control. It will automatically reflect the rest of the sips made till date and will show u the percentage of returns in individual fund and also as a whole
Hi Suresh,
I am a regular follower of your blog. Your advice has helped me to stay aligned on my financial goals. Need your review on my below portfolio:
My SIP’s are ending this month and till now I have accumulated the below folio units after starting MF investment over the last two years or so. I am 33, married and currently have a home loan liability which I am trying to repay at the earliest. My goals include buying a car, saving for my daughters education and marriage and our retirement + foreign trips. I wish to start fresh SIP’s starting next month for which I can allocate 30000 every month. Can you review and recommend. HDFC does not seem to perform well but should I liquidate them and invest them in something else?
92 – Birla Sun Life Frontline Equity Fund -Growth-Regular Plan 226.499units
292G – Birla Sun Life Top 100 Fund – Growth-Regular Plan 1091.236units
157 – DSP BlackRock Micro Cap Fund – Regular Plan – Growth 55.794units
2199909101236 – Franklin India Smaller Companies Fund – GROWTH 1157.977units
0459909101221 – Franklin India Balanced Fund – GROWTH 500.663units
MCOG – HDFC Mid-Cap Opportunities Fund – Regular Plan – Growth 681.043units
44 – HDFC Top 200 Fund – Regular Plan – Growth 76.579units
22 – HDFC Prudence Fund – Regular Plan – Growth 69.736units
DFG – ICICI Prudential Value Discovery Fund – Growth 229.526units
1191 – ICICI Prudential Focused Bluechip Equity Fund – Growth 898.487units
203 – IDFC Premier Equity Fund-Growth-(Regular Plan) 408.607units
103G – SBI Blue Chip Fund – Regular Plan – Growth 931.918units
BFG – Tata Balanced Fund Regular Plan – Growth 273.377units
MCGP – UTI-MID CAP FUND – GROWTH 339.056units
Thanks!
John M.
Good funds. You can start your SIP’s again and consider these fund
Hey Suresh,
Could you clarify on my HDFC question?
Thanks!
John M.
Hi Suresh,
I need to know how does compounding works in mutual fund. I understood the rupee cost average methodology which comes in picture when we use SIP method But compounding in mutual fund is something I couldn’t understand. Since the returns in mutual fund are not fixed how is the money compounded? Like in FD we know the interest rate would be 7.1% and at the end of the year the interest would be added to principal amount in the next year that is the way the money is compounded. Is it that at the year end if a said fund has a return of say 10%, they would buy extra units with that returns and add it to our portfolio? Your reply would be much appreciated.
Thanks in advance
Dear Suresh,
I read almost all your Post with Deep Interest. Myself Practising CA and also monitor most of the MF and stocks that you recommend. I need your views on DSP-BR World Gold which has given around 100 % return in last one year. Altough same cannot be said when we say about 5 years returns. Would be great if you can give your views and analysis on the same.
Rajesh, refer my article yesterday about gold mutual funds, it answers all your queries
Hello Suresh,
Thanks for the in-depth analysis of Top Banking mutual funds. You are recomending to invest for short to medium term. That would mean by how many months ??
Mayur, it would be 3 months to 3 years.