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What are Banking and PSU Funds?

Banking and PSU Funds are debt mutual funds that primarily invest in debt instruments issued by banks, public sector undertakings (PSUs), and government entities. Seeking to balance risk and reasonable returns, these funds provide a relatively stable investment option compared to equity funds while aiming to outperform traditional fixed-income instruments.

Key features:

Underlying securities: These funds predominantly invest in debt securities issued by banks and PSUs. The investments may include bonds, debentures, and other fixed-income instruments, often carrying relatively lower credit risk.

Relative stability: Banking and PSU Funds are considered relatively low-risk compared to other debt funds due to the nature of their underlying securities, which government entities or financially stable corporations typically back.

Credit quality: Fund managers focus on maintaining a portfolio with high credit quality to mitigate the risk of default. This emphasis on credit quality contributes to the overall relative stability of these funds.


While Banking and PSU Funds offer relative stability, it's important for investors to note that they are not entirely risk-free. Factors such as interest rate movements and economic conditions can still impact the performance of these funds. Additionally, investors should review the portfolio composition, credit quality, and historical performance before making investment decisions. As with any investment, understanding the fund's strategy and aligning it with one's financial goals is crucial.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.