IDFC Banking & PSU Debt Fund: Fund review
In recent months, the inability of some corporates to repay their loan obligations has led to a natural aversion for debt schemes.
Retail investors who typically invest for the long term should consider debt schemes as there are relatively safe categories within this space where they can consider allocating a small portion of their investments. One such category is banking and PSU debt. These schemes invest in bonds issued by commercial banks and public sector enterprises. These schemes have attractive post-expense yields and post-tax treatment and low exit loads.
There is reasonable amount of safety of investments since these schemes invest in large banks and large PSUs. One scheme in this category investors can consider is IDFC Banking & PSU Debt Fund. The scheme follows a relatively safe strategy of investing in high number of securities with adequate importance to diversification. Its portfolio has 115 securities — higher than the category average of 49 securities.
Presently, having diversified exposure with a large number of securities minimises market risks to a considerable extent. This is what distinguishes the scheme from its peers. Further, debt schemes such as this would benefit from a likely scenario of falling interest rates.
In the past three-year and five-year periods, the scheme has given 7.4% and close to 8% returns, respectively.
Portfolio change (Past 6 months)
|New Entrants||Complete Exits|
|NABARD SR-19 F 8.50% (31-Jan-23)||08.68% Gujarat SDL -06-Feb-2023|
|Indian Railways Fin SR-132 08.25% (28-Feb-24)||NABARD SR-19 B 08.60% (31-Jan-22)|
|SIDBI SR-II 07.95% (26-Apr-22)||Food Corporation of India 09.95% (07-Mar-22)|
Returns (In %)
|Period||CAGR return||SIP CAGR return||Banking and PSU Fund
-AVG CAGR (%)
Returns Peer Comparison (In %)
|Aditya Birla Sun Life Banking & PSU Debt||9.63||8.20||8.91|
|Axis Banking & PSU Debt Fund||10.10||8.03||8.27|
|Invesco India Banking & PSU Debt Fund||8.71||7.09||7.13|
Rupesh Bhansali, Head-Mutual Funds, GEPL Capital
This scheme is invested in large number of AAA-rated papers which provides enough safety on relative basis. In terms of portfolio the scheme is invested in private sectors banks and relatively well placed PSUs. This gives right amount of protetion for retail investors. The scheme has no exit load which works in favour of investors.