 "Banking mutual funds feel the heat as stocks hit 52-week lows")
Shares of several Indian banks — public as well as private lenders — are hitting their 52-week lows in the last few days. Pressure was clearly visible on PSU counters for quite some time now. Private lenders like Axis Bank and ICICI Bank too are no different when it comes to investors' wealth erosion.
With banking share indices taking a big hit with a steep erosion of nearly 17 % in its value in New Year, the average category return from mutual fund banking-related equity schemes is 16% in the negative territory over the last one year. The Nifty Bank index is down over 16% during the same period.
Amid such a situation, it's interesting to look at what happened to the equity banking mutual fund schemes. There are about 18 such schemes, including exchange traded funds (ETFs), managing assets worth Rs 7,000 crore or less than 2% of industry's overall equity assets under management.
The category’s average return from one year perspective stands at 16.44% in the negative territory. In a slightly longer term phase, 3-5 years, the performance has not been at all impressive with annualised return of 4-5%. The performance looks better only in the 10-year period with annualised rate of return at 14.6%. But then, there are very few schemes which even existed 10 years before.
Bigger schemes in the category — Reliance Banking Fund, ICICI Prudential Banking Financial Services Fund, Sundaram Financial Services Opportunities Fund, Birla Sun Life Banking and Financial Services Fund and UTI Banking Sector Fund — account for about 65% of the total assets at about Rs 4,400 crore.
There are only two funds which have a track record of over a decade — Reliance Banking Fund and UTI Banking Sector Fund. The former, the biggest in the category with an asset size of Rs 2,057 crore, has given a negative return of 12.78% in the last one year. UTI Banking Sector, however, has taken deeper cuts in return as its one year return stands at 17.22% in the negative territory — below the category average. Birla Sun Life Banking and Financial Services Fund, Rs 531 crore scheme, has managed to do much better as it has given a negative return of only 6.48%.
| One-year return of top banking mutual funds | |
| Scheme | 1-year return (%) |
| UTI Banking Sector Fund | -17.22 |
| Sundaram Financial Services Opportunities Fund | -15.72 |
| ICICI Prudential Banking and Financial Services Fund | -13.51 |
| Reliance Banking Fund | -12.78 |
| Religare Invesco Banking Fund | -9.04 |
| Birla Sunlife Banking & Financial Services Fund | -6.48 |
| Category Average Fund | -16.44 |