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Best banking and PSU funds to invest in 2020

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The banking and PSU funds are the new latest subcategory introduced by the SEBI which is securities and exchange board of India in the debt mutual fund category. These funds are invested in debt and money market instruments that include the securities issued by banks, the public sector and the Public financial institutions. The aim to consider all this is to have an optimum balance of safety, yield and liquidity. These funds offer secure returns and minimizing the risk by investing in good quality instruments. One can also get information from the business standard newspaper today for the best working instruments in the market.

Following are the best performing banking and PSU debt funds:

  1. HDFC Banking and PSU debt fund: in case one wants to come through investments in debt and other money market instruments then one must go with securities which are issued by scheduled commercial banks or the public sector undertakings. The HDFC PSU debt fund was launched in 2014 on 26th March. This is a fund with moderately low risk and has given an 8.8% return since its launch. The return for 2019 was 10.2% which is a great return as compared to all others in the sector. The total assets are of Rs.4 848 crore on 31 December 2019. The expense ratio is 0.26 per the information ratio is 0.06. The minimum investment required is Rs.5000 and minimum SIP investment is Rs.500. The yield to maturity is 7.2%. Effective maturity is three years and 18 days.
  2. The UTI Banking and PSU debt fund: the main objective of such investments is to generate a steady and a reasonable income with low-risk and high level of quality and liquidity. This fund was launched on 3rd Feb. 2014 and is a fund with the moderate risk and has given 7% return since its launch. The total assets as on 31 December 2019, is Rs. 146 crore. The expense ratio is 0.35 information ratio is zero. The alpha ratio is also zero with a minimum investment of Rs.5000 and minimum SIP investment of Rs.500. The effective majority is three years six months and 20 days. The exit load is nil. The yield to maturity is 7.01%.
  3. The Kotak Banking and PSU debt fund: in order to generate income by investing in debt and money market securities Sir issued by banks and PSU one must take care of various things. The Kotak Banking and PSU fund were launched on 29 December 1998. This is also a moderately low-risk fund and has given 10.8% return in 2019, 6.7% in 2018 and 6.2% in 2017. Net assets of the company were Rs.4 204 crore as on December 31, 2019. The expense ratio is 0.25 and the information and Alpha ratio are zero. The minimum investment is Rs.5000 and minimum SIP investment is Rs.1000. The exit load is nil and the yield to maturity is 7.09%. The effective maturity is three years, nine months and 22 days. The asset allocation is 21.02% of the cash and 78.98% to debt. The debt sector allocation is 49.17% to the corporate, 46.39% to the government and 4.44% to the cash equivalents.
  4. Aditya Birla Sun Life Banking and PSU debt fund: this is an open-ended short-term income scheme that has the objective to generate income and appreciate the capital by investing the money in a diversified portfolio with low levels of interest rate risk. This was launched on 9 May 2008. This is a moderate risk fund and has given a 8.5% return since its launch. The return for 2019 was 9.9% and in 2018 was 6.6%. The net assets on 31 December 2019 were Rs.9 845 crore. The expense ratio is 0.64 and the information and alpha ratio is zero. The minimum investment is Rs.1000 and the minimum SIP investment is also Rs.1000. The yield to maturity is 6.7% and the effective majority in two years 11 months and 16 days. 4.49% of the value of credit quality is AA and 95.51% in AAA.

The DSP Blackrock banking and PSU debt fund: the main objective of the investment Is to generate income and appreciate the capital by investing in a portfolio of high-quality debt and other money market instruments. This was launched on 14 September 2013 and was given an 8.8% return since its launch. The return for 2019 was 9.9% and for 2018 was 6.3%. The net assets as on 31 December 2019 are Rs.2 354 crore and the expense ratio are 0.5. The information and alpha ratio are zero. The minimum investment required is Rs.1000 and minimum SIP investment is Rs.500. The yield to maturity is 6.73% with an effective maturity of two years, 11 months and 26 days.One can get the information in regard to investments from current news today in the business standard newspaper and these kinds of information are also available on their official app which can be downloaded by the users. Depending upon the risk appetite of the investor he or she can spread its portfolio from the least risky funds to banking and PSU funds and credit risk funds.

For All those investors who do not want to rely on insurance, the government of India provides taxable bonds that offer 7.75% for a time period of seven years whereas the post office deposits offer 7.7% for five years. For investors who are in the 30% tax bracket the banking and PSU funds provided around 7%. The higher will be the duration of the bond Higher it will be susceptible to the interest rate movements. The investors in debt funds with medium and long-term duration have seen a windfall over the last one year with a significant fall in the interest rates. This is the time to take a duration risk. Arbitrage funds also offer relative safety as they are highly tax-efficient. They have the same treatment as the equity-oriented funds and the long-term gain in equity investments up to 1, 00,000 is tax-free. One can get all these kinds of information from the business standard newspaper and app which provide timely and useful information to all its users

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Mahesh is leading digital marketing initiatives at RecentlyHeard, a NewsFeed platform that covers news from all sectors. He develops, manages, and executes digital strategies to increase online visibility, better reach target audiences, and create engaging experience across channels. With 7+ years of experience, He is skilled in search engine optimization, content marketing, social media marketing, and advertising, and analytics.

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