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What is your take on Birla Sun Life Banking and Financial Services Fund

I have invested 15000 lumpsum in "Birla Sun Life Banking And Financial Services Fund" looking at the current rally in Banking sector Mutual Funds. What is your take on this investment. Time horizon is 1-1.5 year approx?

Sep 1, 2016 by Mohit, Noida  |   Mutual Fund

You have invested in a good sectoral mutual fund. Birla Sun Life Banking and Financial Services Fund was launched in December 2013 and since then has given 33.88% annualized returns.

Banking sector mutual funds have done well in the recent past and therefore investors who invested in these funds have been rewarded courtesy the rally in banking sector stocks, especially in private sector banks. The top 6 stocks in this fund’s portfolio are private banks and 54% of the AUM is with these 6 stocks which clearly shows the bullishness of the fund manager on the private sector banks/ institutions.

Launched in Dec 2013, the fund doubled investors money within 31 month when the NAV hit Rs. 20.07 on July 15, 2016.

But that is past performance and should not be the indication of the future returns. Having said that, in any sectoral fund your investment horizon should be of minimum 5 years, but since your horizon is only 1-1.50 years, so there is clearly a mismatch.

Therefore, if you truly want to be rewarded by this fund you should wait for a longer period of time as the growth in our economy has just picked up and the first beneficiary in future would be the banks. Moreover, more and more Indians are getting banked courtesy our Prime Minister’s different initiatives on financial inclusion schemes like Pradhan Mantri Jan Dhan Yojana which ensures a bank account for all Indians. All this will result in tremendous growth of the banking sector and therefore this is once sector where if you can remain invested in the long haul, you can really get good rewards.

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