Top Banking Funds to bet on

Mutual Fund schemes which invest into banks are the ones that have been outperforming the broader markets consistently last several months.

Demonetisation has been the game changer for the finance sector even though it has created short-term headwinds for the sector in the form of lower credit growth and rise in NPL in SME and real estate portfolio (LAP). The negative impact has been lower than widely expected by the market participants.

On the positive side, the banks have gained in the form of higher deposits and treasury gains.

Keeping in mind the anticipated pick-up in credit offtake and steady margins, the banking players can be expected to remain profitable in a longer run. The NPA cycle is also seen peaking out for the banks.

Reliance Banking Fund , Birla Sun Life Banking & Financial Services Fund- Regular Plan and ICICI Prudential Banking and Financial Services Fund are amongst the best performing banking funds.

Banking funds as a category have generated around 5.23 per cent in one month period whereas the returns generated over three months by the banking fund category is around 16.76 per cent. It may be noted here that over one year period, the return generated by the banking fund category is around 41 per cent.