Is it advisable to invest in Banking Fund at this stage

POSTED BY sunil ON April 10, 2012 2:55 pm COMMENTS (10)

Interest rates are at their highest… Banking having NPA’s very high…. still Banking sector remains india’s backbone, so can we consider investingin any Bank Funds over 3-4 parts. I would like to keep this money for a tenure of 4-6 years.

Please suggest

10 replies on this article “Is it advisable to invest in Banking Fund at this stage”

  1. My call is to go with BanyanFA.

    No capital market advances without the Financials leading from the front (leave the exception of tech bubble of2k even when Financials rose big time but not as much as tech). For all your rest of the portfolio to do well financial institutions have to do well. That is the implicit insurance you have. Reliance Banking has been a top flyer for years and still boasts of stellar 3-yr and 5-yr records. Have this kicker in your portfolio for upto say 10-15% by kicking out one of the small cap/mid-cap small cap combos.

    However – Personal risk profile alone will determine the suitability.

  2. somasekhar says:

    Hi Sunil,

    You can go for Banking Funds, but you must have good knowledge on stock markets and reduce your time frame from 6 years to 2 to 3 years.

    Or if you want to do SIP in direct stocks, Go for SBI and ICICI.

    SBI has strong support at 2000, 1800 and ICICI is at 820. So this is the right time to invest in these stocks, but buy these stocks in 2 price points and hold for min 2 years. You can get 40 to 50% profit.


  3. Abhinav Gulechha says:

    Hi Sunil

    The true objective of investing in stocks through mutual funds is to minimise the portfolio risk through proper diversification. In case you opt for sectoral funds like banking etc., as rightly said by dear friend Ashal, you are deliberately taking a concentrated risk exposure.

    Final decision is yours, but in my view, in case if you are investing for one of your set financial goals, please stick to large cap diversified equity funds. Also, since the investment horizon is 4-6 years, you will do well to keep only a part of your investments in equity say 25% and rest in secure debt funds.

    Please let me know your views.

  4. BanyanFA says:

    Definitely it makes a big sense to invest into a Banking Fund. Infact it is one of my top recommendation to all of my clients. It is indeed the best way to have a share of India’s growth as without a sound financial system an economy can not proceed further.

    Reliance Banking Fund is my pick.


  5. when you are choosing banking fund, you are betting on perticular sector. this is not good from investment perspective. Invest in equity opportunity funds. The fund manager will take the call based on the opportunities.

  6. Dear Sunil, Please do have a look on any of the front line Eq. MFs be it large cap or Multicap. You ‘ll notice a good amount is invested in Financial services (including banks) stocks. then why do you need a concentrated exposure?



  7. somasekhar says:


    You can choose on of them.

    1) Reliance Banking ETF
    2) Sahara Bkg & Fin. Services
    3) Reliance Banking Fund (G).

    But split your money into 20 parts and invest every month. Don’t do 3-4 parts, you may see huge loss.


  8. sunil says:

    Dear Ramesh, I am not actually Speculating… infact speculating over prolong period of times is nothing but value investing (loosely termed)…

    1. Ramesh says:

      If there are no objective data to support your analysis, then it is speculation.

  9. Ramesh says:

    Same was said about the infrastructure funds.

    Remember, there are opportunities and there are opportunity costs. Anyways, your query looks more like speculation rather than Value-investing. Good luck.


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