Personal Finance Blog India –

NFO:Taurus Banking And Financial Services Fund:

Taurus mutual fund has come up with New fund offer of fund related to banking & financial services.Primary details of NFO are as follows:

Scheme Objective:

Capital appreciation through a portfolio that invests predominantly in equity and equity related instruments of banking,financial and non-banking financial companies that form a part of BFSI sector.

NFO Period:

  • NFO Opens:May 02,2012.
  • NFO Closes:May 16,2012.
  • Entry Load:Nil.
  • Exit Load:1%,if units are redeemed before completion of 1 year.

So this is a sectoral type of fund and it will be of high risk and high gain type of fund.Performance will be more dependant of the particular banking and financial sector.

Scheme expenses will be capped at 2.50% maximum and will be inclusive in NAVs declared.

Why One Can Think To Invest In Banking Sector:

  • India has the biggest household saving rate after China and large portion of household savings in India goes to banks in the form of savings and deposits.
  • The banking and Financial sector forms biggest portion of total market capitalization of the economy.Top 5 sectors as per market capitalisation are as follows:
Sr.No Sectors MCap(Rs.In crores) Weightage
1 Financials(386 securities) 1,179,470 18.8
2 Energy(47) 9,44,673 15.0
3 Material(552) 809545 12.9
4 Industrials(460) 662782 10.5
5 Information Technology(266) 611,859 9.7

Source:Bloomberg,Taurus research

  • BFSI dominates – 30% of FII investment in Indian equities.
  • Current scenario is that policy rates are trending down or remain flat with easing inflation and its an opportunity to enter in the sector.
  • Banking index (Bankex) have outperformed Sensex since Jan 2012.

Performance of banking index Vs sensex for different periods is as follows:

Period Senxes Bankex
1 Yr -11.64% -10.50%
3Yr 21.48% 37.80%
5Yr 5.89% 12.43%
10Yr 17.50% 25.86%
  • ┬áCAGR Returns Since Jan 2002:

Since Jan 2002,Bankex have offered 27.17% CAGR while sensex have offered 17.80% returns.and can be shown as below:

Source:ACE equity,Taurus Research

Timing of NFO is superior.Chances of hike in policy rates are very less at this stage.

There are few other existing banking related funds available in the market but as investor have already know the theme of the fund,it won’t affect much even if investors invest in this fund….so if you are specifically bullish on banking sector and believes in India’s long term growth story,then may ┬ábet for this fund as well…

Category: Mutual Funds

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