Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now

You can switch off notifications anytime using browser settings.
Stock Analysis, IPO, Mutual Funds, Bonds & More

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.

, ET Bureau|
Jun 25, 2019, 09.59 AM IST
Getty Images
The crisis being faced by a segment of the capital market should not lead to a knee-jerk reaction of shunning it altogether. Investing is all about having a strategy and sticking to it. 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

1 year 10.77 13.37 9.07
3 Year 7.40 8.69 7..54
5 year 7.90 8.32 7.98

Returns Peer Comparison (In %)
Scheme name 1-Year 3-Year 5-Year
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
Source: Accord Fintech, complied by ETIG database

Expert take
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.

Also Read

HDFC Banking and PSU Debt Fund

Essar Steel ruling: PSU bank shares rally

PSU rally likely to continue on re-rating hopes

Looking for opportunities in metals and PSU banks: Yogesh Mehta

India plans to restructure some PSU companies

Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links

Follow us on

Download et app

Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service