Best Mutual Funds in Banks & Financial Services Sector in December 2024 – 3Y CAGR Basis

The banking and financial services sector has consistently been a cornerstone of economic growth, offering resilience and opportunities for wealth creation. For investors looking to capitalise on this dynamic sector, mutual funds focused on banks and financial services provide a diversified and professionally managed way to tap into its potential. In this article, check the best mutual funds in the banking and financial services sector, based on the 3Y CAGR.

Best Mutual Funds in Banks & Financial Services Sector in December 2024 – 3Y CAGR Basis

Note: The best banks and financial services sector mutual funds list provided here is as of November 28, 2024. The funds are sorted based on the 3Y CAGR.

Banks and Financial Services Sector in India

According to the Reserve Bank of India (RBI), India’s banking sector is well-capitalised and highly regulated. The nation’s financial and economic stability surpasses that of many other countries. The Indian banking industry has introduced innovative models like payment banks and small finance banks, while government initiatives such as the Pradhan Mantri Jan Dhan Yojana and post-payment banks have expanded financial inclusion.

The Indian banking system comprises 13 public sector banks, 21 private sector banks, 44 foreign banks, and 12 small finance banks. As of June 2024, India had 15,17,580 micro-ATMs in operation. The total assets of public sector banks reached US$ 1,861.72 billion, while private sector banks held assets worth US$ 1,264.28 billion in 2024.

India’s FinTech industry, valued at an estimated US$ 150 billion by 2025, boasts the 3rd largest FinTech ecosystem globally and is among the fastest-growing markets worldwide.

Factors to Check Before Investing in Banks and Financial Services Mutual Funds

• Sector Performance: Evaluate the growth potential of the banking and financial services sector, considering economic indicators, credit growth, and industry reforms.
• Fund History and Returns: Analyse the fund’s historical performance, focusing on its returns across different market cycles, particularly over the 3- to 5-year timeframe.
• Expense Ratio: Compare the expense ratios of different mutual funds. A lower expense ratio can significantly impact long-term returns.
• Fund Manager Expertise: Research the fund manager’s track record and experience in managing sectoral or thematic funds to ensure consistent performance.
• Risk Factors: Assess the risks associated with sectoral funds, as they are highly sensitive to market conditions and regulatory changes.
• Economic Environment: Monitor macroeconomic factors such as interest rates, inflation, and government policies that influence the banking and financial services sector.
• Investment Horizon: These funds are ideal for investors with a long-term investment horizon who can withstand short-term volatility.

Investing in an SBI SIP? Estimate your potential returns with our SBI SIP Calculator. Start planning your financial future now and watch your wealth grow!

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.