Banks have been an indispensable part of the financial environment. From depositing money to availing credit facilities or credit cards, banks offer numerous helpful services. The rapidly growing economy has positioned banks as a viable option for investors to park their money. Bank mutual funds are a convenient and easy way to invest in some of the leading banking stocks. In this blog, we will take a look at the best bank mutual funds and the key factors you should consider before investing in them.
A banking mutual fund is an equity-oriented sectoral mutual fund. Bank mutual funds invest in equity and related securities of banks and financial services companies.
Being a sectoral mutual fund, it focuses only on companies that operate in the banking and finance sector. As a result, bank mutual funds offer investors exposure to various banks and financial services companies across market caps. The bank mutual fund portfolio may also include insurance companies, non-banking financial companies, and public sector banks.
— Registered with SEBI, AMFI & BSE
— Paperless sign up on web & app
— Expert recommendations
— ZERO fees !
| Fund Name | Category | Risk | NAV | Expense Ratio | 1Y Returns | 3Y Returns | 5Y Returns | Rating | Fund Size (in Cr) | Exit Load |
|---|---|---|---|---|---|---|---|---|---|---|
Nippon India Banking & Financial Services Fund | Equity | Very High | 717.88 | 0.96 | 16.8% | 17.7% | 21.0% | 5 | ₹7,791 | Exit load of 1%, if redeemed within 1 month. |
Invesco India Financial Services Fund | Equity | Very High | 173.67 | 0.79 | 15.2% | 21.5% | 18.9% | 4 | ₹1,588 | Exit load for units in excess of 10% of the investment, 1% will be charged for redemption within 1 year. See more |
SBI Banking & Financial Services Fund | Equity | Very High | 50.92 | 0.73 | 21.0% | 20.4% | 17.9% | 4 | ₹9,812 | Exit load of 0.50% if redeemed within 30 days. |
Sundaram Financial Services Opportunities Fund | Equity | Very High | 123.65 | 0.77 | 17.1% | 19.2% | 18.7% | 4 | ₹1,666 | Exit load of 0.5% if redeemed within 30 days |
Mirae Asset Banking and Financial Services Fund | Equity | Very High | 23.62 | 0.56 | 19.8% | 18.6% | 18.0% | 4 | ₹2,130 | Exit load of 1% if redeemed within one year. |
HDFC Banking & Financial Services Fund | Equity | Very High | 19.15 | 0.8 | 17.0% | 17.1% | NA | 4 | ₹4,512 | Exit load of 1%, if redeemed within 30 days. |
Motilal Oswal BSE Financials ex Bank 30 Index Fund | Equity | Very High | 18.24 | 0.43 | 20.7% | 22.2% | NA | 3 | ₹27 | Exit load-1%- If redeemed within 15 days from the date of allotment. See more |
Tata Banking and Financial Services Fund | Equity | Very High | 52.71 | 0.45 | 18.5% | 17.5% | 17.1% | 3 | ₹3,214 | Exit load of 0.25% if redeemed within 30 days. |
Baroda BNP Paribas Banking and Financial Services Fund | Equity | Very High | 55.92 | 0.76 | 15.4% | 17.0% | 15.3% | 3 | ₹339 | Exit load of 1%, if redeemed within 30 days. |
UTI Banking and Financial Services Fund | Equity | Very High | 225.17 | 1.07 | 16.2% | 16.5% | 16.3% | 3 | ₹1,385 | Exit load of 1%, if redeemed within 30 days. |
ICICI Prudential Banking and Financial Services Fund | Equity | Very High | 155.45 | 1.0 | 15.6% | 15.7% | 16.8% | 3 | ₹11,086 | Exit load of 1% if redeemed within 15 days |
Aditya Birla Sun Life Banking & Financial Services Fund | Equity | Very High | 72.26 | 1.0 | 17.6% | 16.8% | 16.2% | 2 | ₹3,606 | Exit load of 1% if redeemed within 30 days. |
ITI Banking and Financial Services Fund | Equity | Very High | 17.39 | 0.4 | 21.5% | 15.6% | NA | 2 | ₹333 | Exit load of 0.50%, if redeemed within 3 months. |
Taurus Banking & Financial Services Fund | Equity | Very High | 61.25 | 1.57 | 10.8% | 12.4% | 13.6% | 2 | ₹12 | Exit load of 1%, if redeemed within 365 days. |
Motilal Oswal Nifty Bank Index Fund | Equity | High | 21.93 | 0.24 | 16.8% | 11.9% | 14.0% | 2 | ₹667 | Exit load of 1% if redeemed within 15 days. |
Before investing in a bank mutual fund, investors should consider key factors that can not only impact the fund’s performance but also help them make better investment decisions.
Investors should carefully assess their risk appetite and investment goals before investing in a bank mutual fund. Bank mutual funds carry higher risk and are ideal for long-term investments. It is important to ensure that a bank mutual fund aligns with your investment philosophy and risk profile.
Banking and financial companies are significantly affected by changes in interest rates. Before investing in a bank mutual fund, investors should know the current interest rate scenario and the future trajectory to better time their investment decisions.
Before selecting a bank mutual fund, consider the fund’s past performance and other key details, such as its asset allocation and investment approach. Investors should also research the fund manager’s track record to get more detailed insights about a mutual fund.
Tracking investment costs is a vital part of financial management. The expense ratio, transaction charges, and exit load vary by mutual fund. Comparing the expenses and costs of various mutual funds can help you pick the most cost-effective option.
Bank mutual funds are an ideal way to diversify one’s portfolio. Through bank mutual funds, investors can gain exposure to banking and financial services stocks. Moreover, bank mutual funds can enhance diversification by investing in securities of various banks and companies of varying market caps.
The banking and financial services sector is a core sector of the Indian economy. Economic growth, credit demand, and consumption can positively impact the sector as a whole. Further, baking stocks tend to perform better during expansion cycles, potentially generating higher returns for investors.
Picking the right banking or financial services stocks can be a challenge even for seasoned investors. However, a bank mutual fund is managed by professional and qualified fund managers. These managers carefully consider numerous factors and conduct detailed analyses while making investment decisions. This makes investing easy and convenient.
Bank mutual funds are sectoral funds and invest in companies in the banking and financial services sector. The higher concentration in a particular sector exposes the fund to more risk. A downturn in the sector can significantly impact the fund’s performance.
Banks and financial services companies are impacted significantly by changes in interest rates. A rise in interest rates can make borrowing more expensive, negatively affecting margins and profitability.
Bank mutual funds are equity-oriented funds and are exposed to market risks. Changes in investor sentiment, market trends, or geopolitical events can negatively affect a bank mutual fund's performance.
The banking sector is heavily regulated to ensure fair lending and borrowing practices. Changes in lending norms or stricter regulations can negatively impact the banking sector, leading to underperformance of bank mutual funds.
Bank mutual funds are equity funds and are taxed accordingly. Depending on the holding period, the gains are subject to either short-term capital gains tax (STCG) or long-term capital gains tax (LTCG).
The gains on units of the mutual fund sold more than 12 months ago are subject to STCG of 20%.
If the units are sold after 12 months and the gains exceed the threshold limit of ₹1.25 lakh, the gains are subject to a 12.5% LTCG tax.
A bank mutual fund is a sectoral, equity-focused fund which invests in the stocks of banks and financial services companies.
A bank mutual fund has the potential to generate higher returns during economic expansions. It can also help investors create a diverse portfolio.
Bank mutual funds can be highly volatile and are sensitive to interest rates, making them suitable for investors with a larger risk appetite.
Bank mutual funds can be a good option for beginners looking to gain exposure to various banking and financial services companies.
The ideal investment horizon for bank mutual funds is 5 years or more.
Gains on bank mutual funds are subject to capital gains tax based on the holding period. Based on the holding period, gains are subject to STCG of 20% or LTCG of 12.5%.
Now let us jump and check about these top 15 mutual fund schemes.
Fund Performance: The Nippon India Banking & Financial Services Fund has given 17.74% annualized returns in the past three years and 21% in the last 5 years. The Nippon India Banking & Financial Services Fund comes under the Equity category of Nippon India Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Nippon India Banking & Financial Services Fund via lump sum is ₹5,000 and via SIP is ₹100.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹7,791Cr |
| 1Y Returns | 16.8% |
Fund Performance: The Invesco India Financial Services Fund has given 21.46% annualized returns in the past three years and 18.87% in the last 5 years. The Invesco India Financial Services Fund comes under the Equity category of Invesco Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Invesco India Financial Services Fund via lump sum is ₹1,000 and via SIP is ₹100.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹1,588Cr |
| 1Y Returns | 15.2% |
Fund Performance: The SBI Banking & Financial Services Fund has given 20.44% annualized returns in the past three years and 17.92% in the last 5 years. The SBI Banking & Financial Services Fund comes under the Equity category of SBI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in SBI Banking & Financial Services Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹9,812Cr |
| 1Y Returns | 21.0% |
Fund Performance: The Sundaram Financial Services Opportunities Fund has given 19.23% annualized returns in the past three years and 18.72% in the last 5 years. The Sundaram Financial Services Opportunities Fund comes under the Equity category of Sundaram Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Sundaram Financial Services Opportunities Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹1,666Cr |
| 1Y Returns | 17.1% |
Fund Performance: The Mirae Asset Banking and Financial Services Fund has given 18.65% annualized returns in the past three years and 18.03% in the last 5 years. The Mirae Asset Banking and Financial Services Fund comes under the Equity category of Mirae Asset Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Mirae Asset Banking and Financial Services Fund via lump sum is ₹5,000 and via SIP is ₹99.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹2,130Cr |
| 1Y Returns | 19.8% |
Fund Performance: The HDFC Banking & Financial Services Fund comes under the Equity category of HDFC Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in HDFC Banking & Financial Services Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹4,512Cr |
| 1Y Returns | 17.0% |
Fund Performance: The Motilal Oswal BSE Financials ex Bank 30 Index Fund comes under the Equity category of Motilal Oswal Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Motilal Oswal BSE Financials ex Bank 30 Index Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹27Cr |
| 1Y Returns | 20.7% |
Fund Performance: The Tata Banking and Financial Services Fund has given 17.52% annualized returns in the past three years and 17.05% in the last 5 years. The Tata Banking and Financial Services Fund comes under the Equity category of Tata Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Tata Banking and Financial Services Fund via lump sum is ₹5,000 and via SIP is ₹100.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹3,214Cr |
| 1Y Returns | 18.5% |
Fund Performance: The Baroda BNP Paribas Banking and Financial Services Fund has given 17.02% annualized returns in the past three years and 15.34% in the last 5 years. The Baroda BNP Paribas Banking and Financial Services Fund comes under the Equity category of Baroda BNP Paribas Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Baroda BNP Paribas Banking and Financial Services Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹339Cr |
| 1Y Returns | 15.4% |
Fund Performance: The UTI Banking and Financial Services Fund has given 16.46% annualized returns in the past three years and 16.31% in the last 5 years. The UTI Banking and Financial Services Fund comes under the Equity category of UTI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in UTI Banking and Financial Services Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹1,385Cr |
| 1Y Returns | 16.2% |
Fund Performance: The ICICI Prudential Banking and Financial Services Fund has given 15.7% annualized returns in the past three years and 16.84% in the last 5 years. The ICICI Prudential Banking and Financial Services Fund comes under the Equity category of ICICI Prudential Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Banking and Financial Services Fund via lump sum is ₹5,000 and via SIP is ₹100.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹11,086Cr |
| 1Y Returns | 15.6% |
Fund Performance: The Aditya Birla Sun Life Banking & Financial Services Fund has given 16.77% annualized returns in the past three years and 16.18% in the last 5 years. The Aditya Birla Sun Life Banking & Financial Services Fund comes under the Equity category of Aditya Birla Sun Life Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Aditya Birla Sun Life Banking & Financial Services Fund via lump sum is ₹1,000 and via SIP is ₹100.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹3,606Cr |
| 1Y Returns | 17.6% |
Fund Performance: The ITI Banking and Financial Services Fund comes under the Equity category of ITI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in ITI Banking and Financial Services Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹333Cr |
| 1Y Returns | 21.5% |
Fund Performance: The Taurus Banking & Financial Services Fund has given 12.4% annualized returns in the past three years and 13.62% in the last 5 years. The Taurus Banking & Financial Services Fund comes under the Equity category of Taurus Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Taurus Banking & Financial Services Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹12Cr |
| 1Y Returns | 10.8% |
Fund Performance: The Motilal Oswal Nifty Bank Index Fund has given 11.88% annualized returns in the past three years and 14% in the last 5 years. The Motilal Oswal Nifty Bank Index Fund comes under the Equity category of Motilal Oswal Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Motilal Oswal Nifty Bank Index Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹667Cr |
| 1Y Returns | 16.8% |
Explore all Mutual Funds on Groww