Top 5 Banking and PSU Debt Mutual Funds
Banking and PSU (Public Sector Undertaking) debt mutual funds are a highly favoured investment vehicle for those seeking safety, low risk, and good returns. These short-term debt schemes invest predominantly in high-quality debt instruments of banks and government-backed institutions. According to SEBI regulations, the fund’s portfolio must have at least 80% investments in debt securities of banking and public sector units.
Famous for their superior credit quality, these funds offer a safe balance of returns, liquidity, and safety. In the past five years, a Rs. 12,000 monthly investment in some of the best-performing funds in this segment has increased to almost Rs. 8.76 lakh. Below is a detailed analysis of five such funds that have given robust returns:
1. UTI Banking & PSU Fund
The UTI Banking & PSU Fund has achieved a 7.78% annualised return over the past five years via SIPs. The fund has assets under management of Rs. 825 crore, and its Net Asset Value (NAV) is Rs. 21.87. Since its inception in January 2014, it has provided an average annualised return of 7.24%, and it is tracking the Nifty Banking & PSU Debt Index A-II.
With a low expense ratio of 0.32%, the minimum SIP amount is Rs. 500, and the lump sum minimum is Rs. 5,000. The Rs. 12,000 monthly SIP has risen to Rs. 8.76 lakh over the last five years.
2. ICICI Prudential Banking & PSU Debt Fund
The ICICI Prudential Banking & PSU Debt Fund has returned 7.43% SIP returns on a five-year annualised basis. With assets under management (AUM) of Rs. 10,092 crore and an NAV of Rs. 33.54, the fund has been a steady performer. It follows the Nifty Banking & PSU Debt Index A-II and has given a long-term annualised return of 8.24% since its inception in January 2013.
The expense ratio is 0.39%; the minimum SIP investment required is Rs. 1,000, and the minimum lump sum investment is Rs. 5,000. A Rs. 12,000 monthly SIP for five years has increased to Rs. 8.68 lakh.
3. Kotak Banking and PSU Debt Fund
The Kotak Banking and PSU Debt Fund has given a 7.25% return on an annualised basis through SIPs for the past five years. The fund has assets of Rs. 5,762 crore and an NAV of Rs. 66.94. It is tracked against the CRISIL Banking and PSU Debt A-II index and has given an 8.24% yearly return since it was launched in January 2013.
With an expense ratio of 0.39%, the minimum SIP and lump sum investment values are Rs. 1,000 and Rs. 5,000, respectively. A regular SIP of Rs. 12,000 per month for five years has increased to Rs. 8.64 lakh.
4. Edelweiss Banking and PSU Debt Fund
The Edelweiss Banking and PSU Debt Fund has a 7.19% five-year annualised SIP return. The fund holds Rs. 263 crore in assets, with a present NAV of Rs. 25.12. It is tracked against the CRISIL Banking and PSU Debt A-II and has given annualised returns of 8.28% since August 2013 when it was launched.
5. Aditya Birla Sun Life Banking & PSU Debt Fund
The Aditya Birla Sun Life Banking & PSU Debt Fund has returned 7.17% per annum over five years through SIP. With an AUM of Rs. 9,586 crore and an NAV of Rs. 374.43, the fund has been among the consistent players in the space. The fund follows the Nifty Banking & PSU Debt Index A-II and has given long-term annualised returns of 8.51% since January 2013.
It has an expense ratio of 0.39%. The minimum SIP and lump sum investments are Rs. 1,000. Rs. 12,000 per month SIP has become Rs. 8.63 lakh over the past five years.
These five Banking and PSU debt mutual funds have shown that low-risk debt funds can not only provide tangible growth through steady monthly investments but also suit investors looking for stability and capital protection with superior returns over traditional savings avenues.
