Investing in banking and financial services funds can be a strategic move to diversify your portfolio and capitalize on the ever-evolving financial landscape. These funds, specializing in the dynamic sector of banking and financial services, have shown remarkable performances in recent times.
As of December 15, 2023, data from the National Securities Depository Limited (NSDL) website reveals that the assets under custody (AUC) totaled ₹19,41,167 crores. With investments reaching such high levels, the significant interest of Foreign Institutional Investors (FIIs) in this sector is apparent, highlighting its growth potential.
Not all investors participate in stock markets exclusively for financial gains; some choose mutual funds, relying on the experience of experienced fund managers.
| Name of the banking and financial services Fund | 5-year returns (in %) | 10-year returns(in %) |
| Invesco India Financial Services Fund | 16.61 | 19.10 |
| Aditya Birla Sun Life Banking and Financial Services Fund | 14.23 | 18.81 |
| ICICI Prudential Banking and Financial Services Fund | 13.07 | 18.40 |
| Sundaram Financial Services Opportunities Fund | 19.48 | 18.14 |
| Nippon India Banking & Financial Services Fund | 14.83 | 17.82 |
| Taurus Banking and Financial Services Fund | 14.97 | 15.69 |
| UTI Banking and Financial Services Fund | 11.80 | 14.99 |
In 2023, the financial services sector saw a significant influx of $5.9 billion, serving as a strong indicator of investor confidence. This suggests that, despite ongoing market uncertainties, there is considerable interest in the sector’s potential for long-term growth.
Analysts predict increased interest from Foreign Institutional Investors (FIIs) in financial stocks, driven by the continuing decline in the interest rate cycle. The expected outcome is higher valuations for financial companies due to lower interest rates, making them more attractive to investors. Consequently, this could lead to a further injection of capital into the financial sector.