NFO – SBI Mutual Fund Banking & Financial Services Fund

SBI Mutual Fund has come up with new fund -Banking and Financial Services fund – which will invest predominantly in stocks related to banking and Financial sector like Public sector / Private sector banks,NBFCs ,insurance companies etc.

New fund offer has opened on Feb 11, 2015 and will close on Feb 24, 2015.

This is will be sectoral type of fund and performance will depend more on banking and financial sector stocks.

Why One Can Invest in Banking Sector :

• High household saving rate:India has biggest saving rate after China and large portion of saving goes to banks.New initiatives like Jan Dhan yojana or direct cash transfer will result in more saving in future.
• Banking and Financial sector fund forms biggest part of total market capitalization.Banking stocks constitutes about 22% of NIFTY capitalization.
• Current scenario of easing inflation rate and trending down interest rates can result in higher credit growth in future which can beneficial to banking sector.
• Higher foreign investment in insurance sector likely to help insurance sector to grow more in future.

Ongoing Banking Funds :

Fund Name	Starting NAV	NAV as on Feb 14, 2015	Inception Date	Returns since inception  CAGR
Reliance Banking fund	10	187	May 2003	28.41%
UTI Banking Fund	10	69.79	Apr 2004	19.59%
Sahara Banking Fund	10	48.74	Sept 2008	28.01%
ICICI Pru Banking & Financial Services Fund	10	38.57	Aug-2008	23.15
Religare Invesco Banking fund	10	36.30	July 208	21.61%
Sundaram Financial Services Opportunities Fund	10	30.32	June 2008	18.06%
Taurus Banking & Financial Services Fund	10	18.54	May 2012	25.36%
Baroda Pioneer Banking And Financial Services fund	10	16.97	June 2012	22.12%
Birla Sunlife Banking & Financial Services Fund	10	17.45	Dec 2013	60.24%

Funds launched at different dates and returns are from since launch…Reliance banking fund have provided returns of 28% CAGR since inception is the oldest fund in this category while BSL banking fund is the latest fund launched in 2013 ..as all funds have launched at different dates ..so returns will be different.(e.g 28% returns of Reliance banking Fund and 60% returns of BSL banking fund are not comparable as launch dates are different)

If economy improves further,banking sector will an obvious gainer.But one should remember than this fund is sector fund and carries high risk as well.