NPA Crisis: Stay away from PSU banking mutual funds

Equity funds focused on banking stocks continue to be weighed down by the gloom surrounding the sector. Over the past year, this fund category has tailed international funds as the worst performing category, clocking a negative return of 7.53%.

The worst affected funds have been the ones purely focused on the PSU banking segment. Kotak PSU Bank ETF and Goldman Sachs PSU Bank BeES Fund have both seen a 36% drop in their NAV over the past year. Investors willing to bet on the banking sector should not restrict their exposure to PSU bank focused funds.

If at all, opt for funds which invest across banking and financial services stocks. Here the fund manager has the freedom to pick from a basket of private banking as well as non-banking financial services players that boast of better quality loan books, apart from PSBs. These funds have done relatively better in recent times.


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