Fund Of Fortnight

DSP Banking & Financial Services Fund Direct - Growth  [EasyDNNnews:PaidContentStart] 

Reason for recommendation

Banking and financial services are the economy’s plumbing; when credit demand, retail spending, housing and business activity expand, banks, NBFCs and other f inancial companies typically get operating leverage through higher loan books/premiums, better fee income and improving scale. The FY2026 system credit growth outlook is 10.7–11.5 per cent. Gross NPAs are forecast to stay in a comfortable 2.1–2.3 per cent band in FY2026, and NIMs are expected to bottom out and improve in H2 FY2026. Against this background, the fund from this sector is likely to do better. Hence, our selection this time is DSP Banking & Financial Services Fund. The fund has consistently beaten its category average across every time frame, which is a strong sign of steadier relative performance. Over the last 1 month, it delivered 2.09 per cent versus the category’s 0.90 per cent. The outperformance becomes even clearer over longer horizons; 1 year returns stand at 22.85 per cent compared to 17.12 per cent for the category, while 2 year returns are 18.54 per cent against 12.25 per cent.

The portfolio is built as a high-conviction companies. Its top holdings include ICICI Bank (13.88 per cent), Axis Bank (7.87 per cent), SBI (6.96 per cent), Bajaj Finance (5.31 per cent), and SBI Life (4.77 per cent). Together, the top five account for about 38.79 per cent of assets, so these leaders will largely drive outcomes, both on the upside and the downside. The fund remains finance-heavy as it is a thematic fund. While its market-cap spread—large caps (56.2 per cent), mid caps (22.2 per cent), and small caps (16.3 per cent)—adds a mix of stability and growth potential within the theme.

his fund is best used as a satellite allocation for high-risk investors who already have a diversified core. Expect sharper swings than diversified funds, especially around interest-rate shifts, liquidity conditions and credit sentiment. The scheme is young (launched December 8, 2023) with AUM of about `1,583 crore. Keep exposure modest, and hold the fund for 5+ years.

[EasyDNNnews:PaidContentEnd] [EasyDNNnews:UnPaidContentStart]

[EasyDNNnews:UnPaidContentEnd]