Best banking & PSU mutual funds to invest in July 2024 (2024)

Synopsis

Mutual fund advisors say banking & PSU debt schemes are ‘relatively’ safe because these schemes invest only in bonds and papers of banks and public sector companies. Since most of these entities are government-backed, they don’t have the credit risk.

Best banking & PSU mutual funds to invest in July 2024 (1)iStock

Are you looking for relatively safe debt funds to invest for a few years? You can consider investing in Banking & PSU debt funds. These schemes have the mandate to invest at least 80% of their corpus in debt investments of banks, public sector undertakings, and public financial institutions.

ET Guide to ITR

Who should switch from old to new tax regime now?No tax refund if you filed ITR with this refund amtYou can be jailed for not filing ITR and paying tax

Mutual fund advisors say banking & PSU debt schemes are ‘relatively’ safe because these schemes invest only in bonds and papers of banks and public sector companies. Since most of these entities are government-backed, they don’t have the credit risk.

Also Read | Top 10 mutual funds which delivered up to 47% return since interim Budget

Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations.View Details»

These schemes have become extremely popular after the troubles in the debt mutual fund space three years ago. The debt market was rocked by downgrades and defaults not long ago. Many conservative investors stopped investing in debt schemes because they were scared of getting back their money.

However, this doesn’t mean that these schemes do not have any risk at all. For example, these schemes also invest in papers issued by private banks. Since they don’t have government backing, they carry some risk. However, since banks are highly regulated, the risk is minuscule. Also, interest rate changes can adversely affect these schemes.

A rising or firm interest rate environment is bad for debt funds. However, since these schemes do not invest in very long-duration papers, they will be relatively better off. Most money market pundits say the interest rates have peaked and the RBI will start cutting interest in the later part of the year. It may start cutting rates, once it is convinced that inflation is cooling off. However, be prepared for some volatility till then.

If you are investing for three years and aware of the risks associated with these schemes, you can consider investing in Banking & PSU schemes. DSP Banking & PSU Debt Fund has been in the second quartile for five months. The scheme was in the third quartile earlier. Axis Banking & PSU Debt Fund, one of our recommended schemes, has been in the third quartile for the last eight months. Here are our recommended schemes. Look for our monthly updates to keep track of your schemes.

Also Read | Union Budget 2024: What mutual fund investors expect from FM Nirmala Sitharaman's Budget

Best Banking & PSU funds to invest in July 2024:

  • Bandhan Banking & PSU Debt Fund
  • Axis Banking & PSU Debt Fund
  • Aditya Birla Sun Life Banking & PSU Debt Fund
  • DSP Banking & PSU Debt Fund
  • Kotak Banking & PSU Debt Fund
Methodology:

ETMutualFunds has employed the following parameters for shortlisting the debt mutual fund schemes.
1. Mean rolling returns: Rolled daily for the last three years.

2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.

i)When H = 0.5, the series of returns is said to be a geometric Brownian time series. These types of time series are difficult to forecast.

ii)When H <0.5, the series is said to mean reverting.

iii)When H>0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series

3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.

X =Returns below zero

Y = Sum of all squares of X

Z = Y/number of days taken for computing the ratio

Downside risk = Square root of Z

4. Outperformance: Fund Return – Benchmark return. Rolling returns rolled daily is used for computing the return of the fund and the benchmark and subsequently the Active return of the fund.

Asset size: For debt funds, the threshold asset size is Rs 50 crore

(Disclaimer: past performance is no guarantee for future performance.)

Read More News on

(Catch all the Mutual Fund News, Breaking News, Budget 2024 Events and Latest News Updates on The Economic Times.)

Subscribe to The Economic Times Prime and read the ET ePaper online.

...moreless

Read More News on

mutual fundsmutual fund newsPSU

(Catch all the Mutual Fund News, Breaking News, Budget 2024 Events and Latest News Updates on The Economic Times.)

Subscribe to The Economic Times Prime and read the ET ePaper online.

...moreless

Prime ExclusivesInvestment IdeasStock Report PlusePaperWealth Edition

  • Best banking & PSU mutual funds to invest in July 2024 (2)

    A concrete reason why Adani is fighting Birla in this key sector

  • Best banking & PSU mutual funds to invest in July 2024 (3)

    Has Nirmala Sitharaman listened to Warren Buffett on capital gains?

  • Best banking & PSU mutual funds to invest in July 2024 (4)

    Why India should be worried about what’s happening in Bangladesh

  • Best banking & PSU mutual funds to invest in July 2024 (5)

    Don’t just look overseas; Indian deep-tech should mine the domestic market: Lip-Bu Tan

  • Best banking & PSU mutual funds to invest in July 2024 (6)

    Why EV and AI’s energy-saving pitch in India is a clickbait

  • Best banking & PSU mutual funds to invest in July 2024 (7)

    Why the Jammu area is becoming an epicentre of terror

  • 1
  • 2
  • 3

View all Stories

Best banking & PSU mutual funds to invest in July 2024 (2024)
Top Articles
Latest Posts
Recommended Articles
Article information

Author: Ms. Lucile Johns

Last Updated:

Views: 5867

Rating: 4 / 5 (41 voted)

Reviews: 80% of readers found this page helpful

Author information

Name: Ms. Lucile Johns

Birthday: 1999-11-16

Address: Suite 237 56046 Walsh Coves, West Enid, VT 46557

Phone: +59115435987187

Job: Education Supervisor

Hobby: Genealogy, Stone skipping, Skydiving, Nordic skating, Couponing, Coloring, Gardening

Introduction: My name is Ms. Lucile Johns, I am a successful, friendly, friendly, homely, adventurous, handsome, delightful person who loves writing and wants to share my knowledge and understanding with you.