Advantages of Banking and PSU Funds
1. Diversification of Capital: As banking and PSU Funds, invests capital among different top-rated debt instruments containing securities which are issued by banks and public sector undertakings, this gives exposure of different classes of asset to the investor and balances the portfolio as per the prevailing market condition.
2. Mitigation of Risk: Under banking and PSU Funds, the investment is made under securities issued by banks and the public sector and these sectors are not prone to risk, and they will perform constantly as per their characteristics. Bank and PSU funds mitigate the risk of losing capital, as they provide constant and regular income.
3. Steady Returns: Banking and PSU Funds being diversified in nature has the main advantage of gaining returns even in volatile market conditions. Investors who have low risk-bearing capability, prefer Banking and PSU Funds for steady returns. Under banking and PSU funds, the funds are backed by the central government.
4. Flexibility: Banking and PSU Funds have a high degree of flexibility associated with them, as at any time an investor can manage his/her holding between selected securities if the prevailing market condition is not favourable to his/her portfolio. Most of the time the fund managers focus on debt-based funds to minimize the risk factor for investors
5. Expert Opinion: Banking and PSU Funds being managed by an experienced fund manager gives investors the best choice for a portfolio. Investors can avail the benefit of investing in top-rated securities of PSUs and banks while staying invested in a single fund.