Banking and Financial Services Funds have outperformed by providing returns ranging from 33% - 50% for the year ended Nov 2010. Nifty and Sensex based Index funds have returned 15-17% during the same period. Bank Nifty Index has given a CAGR of 23% over a 5 year period as compared with 17% by Nifty Index, but with a higher volatility.
Banking and Financial Services Funds universe includes Reliance Banking Fund, Kotak PSU Bank ETF, UTI Banking Sector Fund, Sundaram Financial Services Opportunities Fund, PSU Bank Benchmark Exchange Traded Scheme (PSU Bank BeES), Banking Index Benchmark Exchange Traded Scheme (Bank BeES)
However, Banking and Financial Services Funds are sector funds and thus more riskier than diversified equity funds. Investors can consider taking a 10% portfolio exposure to sector funds through SIP/STP route with a 3-5 year horizon.
Also read:
http://economictimes.indiatimes.com/opinion/interviews/Auto-PSU-banks-to-stay-ahead-Rajat-Rajgarhia--Motilal-Oswal-Securities/articleshow/6751130.cms
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