New Fund Offer: DSP Mutual Fund launches Banking and Financial Services Fund. Check details

financialexpress.com:

DSP Mutual Fund has announced the launch of DSP Banking & Financial Services Fund (DSP BFSF), which is an open-ended scheme that offers investors an opportunity to partake in the long term structural opportunity in the banking and financial services space. 

Apart from banks, the sector also encompasses major areas like NBFCs including Housing Finance Companies, Life Insurance, Non-Life Insurance, AMC, Exchanges & Depositories, which have all grown at a faster rate than the nominal GDP of India in the last 15 years. All these combined make up a profit opportunity of over $ 4 Trillion.

The Banking and Financial Services sector has been a structural growth story in India, which is evident in its outperformance over the broader Nifty 50 Index on all 10-year periods. The returns from the sector have also been more consistent across time periods compared to the broader Nifty 50 Index. 

However, the sector has been underperforming the Nifty 50 Index since September 2019. Hence, the possibility of a reversal in underperformance combined with reasonable valuations for the Banking and Financial Services sector along with their strong balance sheets present an interesting opportunity to investors. 

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The Nifty Financial Services TRI has also delivered over 12% returns in 90% of times over a 7+ year timeframe compared to 52% for Nifty 50 TRI. Banking, Financial Services and Insurance (BFSI) forms 38% of the profit pool of the Top 500 companies in India, but is just 26% of the market cap. 

The last 10-year profit growth for BFSI was 17% compared to 10% among Top 500 companies excluding BFSI. Bank balance sheets have also grown stronger with lower NPAs.