Reliance Banking Fund - Bet On Banking

The peaking of the interest rate cycle, tapering inflation rates and stable growth forecasts for the Indian economy all augur well for the country’s banking sector. Buying into one of the most consistent banking funds is the best way to ride the growth that this sector presents going forward. Launched in May 2003, the Reliance Banking Fund is one of the oldest and most consistent banking funds that has rewarded its investors with an astounding 28.33 per cent annualised returns. 

The fund has been the best of the lot in the longer time horizon. The last year has been quite tough for this sector, as nothing went right for it – high inflation, the RBI raising rates and headwinds over global financial markets made things tough for the fund managers. Though this fund has not been the best performer in this period, it has certainly managed to restrict losses better than the category average. The fund has also managed risk well, recording the second-best Sharpe ratio in its category. Sunil Singhania, who is among the industry’s most renowned fund managers, has been associated with this fund since 2005.

This is a Multi-Cap fund that predominantly focusses on select Large-Caps within public sector banks and stocks in the private sector banking space with a higher beta. The fund also takes concentrated bets in select Mid-Cap stocks in the banking and financial sectors to generate an alpha for investors. It actively manages allocation between public sector banks, private sector banks and NBFCs, depending on the environment and outlook. Investors with a high risk appetite can take limited exposure in this fund.