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Canara Robeco Bluechip Equity Fund

This fund has generated solid 1-year returns of 53%, while in the slightly longer term of three years the returns are 19.55% on an annualized basis. Canara Robeco Bluechip Equity Fund has been well rated by rating agency CRISIL as 5-star. The portfolio of the fund is extremely sound at includes names like HDFC Bank, Infosys, ICICI Bank, Reliance Industries, Tata Consultancy Services and State Bank of India.

This fund is a largecap fund and the risk is therefore a little less compared to funds that are small cap or midcap. However, that does not mean there is no risk. Investors in largecap fund also face the risk, in case of a market collapse. This is why when the Sensex is at a peak of 53,000 points, we are recommending investors to go with good SIPs, which is the best bet in the current market to average your risk.

Axis Long Term Equity Fund

This fund has been a consistent performer over the years, and has often been rated in the 5-star category by Crisil, Value Research and Morning Star. It continues to be accorded a very high rating of 5-star by Morning Star.

You can start an investment with a small sum of Rs 500 by way of SIP. The fund is very large in terms of assets managed and currently has assets under management of nearly Rs 30,000 crores.

Almost 99.6% of the fund is invested in equities, which means the fund is very low on cash and cash equivalents. This may not neccessarily be the best option, if the markets fall, as the fund manager would not be on cash to invest. The fund has given a returns of 53% in a-year and the annualized yield of 16.15% over the last 5-years.

Mirae Asset Tax Saver Fund

Mirae Asset Tax Saver Fund as the name suggests is a tax saver fund that offers tax savings under Sec 80C of the Income Tax Act for investments upto Rs 1.5 lakhs.

Mirae Asset Tax Saver Fund has been rated 5-star by CRISIL and has generated returns of 68.15% in the last 1-year. The fund has assets under management to the tune of Rs 7,300 crores. The fund has mostly invested in largecaps with stocks like Infosys, HDFC Bank and ICICI Bank among the portfolio of the fund.

Investors can look to invest in the SIP of the fund with a small investment of as less as Rs 500 each month.

We wish to emphasize the fact that markets have run-up too sharply in the last few months and hence investing lumpsum amount can be dangerous. It is therefore, better to invest through the SIP route. Shouls the markets fall from these levels by 10% or so, investors can look to increasing their SIPs. At the moment the markets are very expensive.

UTI Flexi Cap Fund

UTI flexi Cap Fund is a fund that invests in stocks across different market capitalizations. This means the fund manager can move money from largecap stocks to small cap or midcap and vice versa. This can make the returns more dynamic and sync things in tune with the movement across companies.

UTI Flexi Cap Fund has a 5-star rating from CRISIL, which is the highest possible rating. This fund is good for those looking at long-term returns. UTI Flexi Cap Fund has generated a 1-year returns of 70%, in line in which the markets have moved over the last one year.

The 5-year annualized returns are more moderate at that 18% annualized mark. The holdings of the fund includes name like HDFC Bank, Bajaj Finance, HDFC, L&T etc.

Disclaimer

Investing in mutual funds are risky and investors should do their own research. The author, or Greynium Information Technologies is not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as markets have run-up significantly.

For those investors who are optimistic on the banking and PSU sector landscape going ahead can definitely park their corpus for fixed income investment in this category of funds for reaping higher return than bank fixed deposits. Now, before we discuss all such top rated funds, here is in brief what investors should be mindful of:

Is It The Right Time To Invest In Banking And Debt PSU Funds?

Banking and financial services sector form the foundation of the economy. Until now the sector confronted negatives such as weak asset quality but now these parameters seem to be behind us. Moreover, provisioning for bad debts has also reduced. Now as even amid the pandemic banks in India came up with better results with lower slippages, underlying strength in the sector is reflected. Also, India Inc.’s resilience provides for a better corporate NPA cycle picture.

Pointers to note when investing in Banking and financial services fund:

These should be invested in to form the fixed income portfolio for a long term or can even be pocketed in for medium term investment. Also, the fund tends to give returns by investing in the sector (i.e. mostly bonds issued by PSUs, banks) which shows high correlation to the economy.

Economic and sectoral risk can also have an impact on the returns generated by such funds and hence investors need to be prepared for even low returns. To moderate this aspect, funds deploy funds across sub-segments.

3 Banking and Financial services fund

Now considering all the above listed sectors if you want to participate in the growth story of banking industry of India going ahead:

1. ICICI Prudential Banking & PSU Debt Fund – Growth:

This is a 5-star CRISIL rated fund with an asset under management size of Rs. 13,920 crore. Expense ratio involved in the fund is 0.8 percent, while the fund carries moderate risk as per the mutual fund risk-o-meter.The fund has over 98% corpus invested in debt instruments and these funds primarily in bonds issued by banks, PSUs as well as PSU financial entities. The funds are able to give a better return than bank FDs.

For lump sum investment a minimum of Rs. 500 needs to be invested, while an investor can also start a SIP in the fund.
SIP of Rs. 10000 monthly has grown in value to Rs. 4.04 lakh in a period of 3 years.

2. Axis Banking and PSU Debt Fund-Growth:

The 4-star CRISIL rated fund commands an exorbitant fund size of Rs. 17,077 crore. As per the risk-o-meter the fund carries low to moderate risk and the expense ratio is 0.62 percent. Over the 3-year period, the fund has yielded a good over 8 percent return. NAV of the fund as on June 30, 2021 has been 2081.48.

Minimum SIP investment in the fund can be of Rs. 1000 while on a lump sum basis, investors need to put in a minimum of Rs. 5000.

3. Nippon India Banking & PSU Debt fund:

This is a CRISIL 3-star rated and Value Research 5-star rated fund. NAV of the fund as on June 30, 2021 is 16.32. SIP investment in the fund can be started for as less as Rs. 100 and minimum lump sum investment has to be to the tune of Rs. 5000.
SIP started 3 years back with a monthly investment of Rs. 10000 is now equivalent to Rs. 4.08 lakh.

Taxation of Banking and PSU Debt fund

For dividends, these are added to individual income and taxed as per the respective tax slab. Also, in a case if the dividend income exceeds Rs. 5000 in a fiscal year then TDS of 10% is also deducted.

Disclaimer: Note the above story is for informational purpose. Investors should consult financial advisers before taking any investment decision.

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