Banking Funds are the Most Secure Sector Funds
Banking and Finance Sector mutual funds target to invest in equity shares of the core banks and other financial institutions with the objective of profit booking. It is a sector based mutual fund scheme which invests in the core banking companies using a diversified scheme. The primary goal of launching Banking and Finance Sector mutual funds is to increase the investment in this sector of the economy. Diversification increases by manifolds.
The Two parts of Banking and Finance Sector Mutual Funds
- Banking sector: The banking sector includes those institutions which are engrossed purely in the core banking activities like retail banking, CASA (Current Account & Savings Account), loans, etc. Banking and Finance Sector mutual funds target the prominent banks to invest in. Providing finances as well as financial services at the same time the banking sector of the economy proves to be the backbone of the commercial sector.
- Financial sector: The main motto of the financial sector is to provide credit opportunities to people, institutions or organizations as a whole. Banking and Finance Sector mutual funds includes this sector because it is similar to the banking sector only not carrying out the core banking activities. This sector helps to mobilize liquidity in the money market in order to facilitate growth of the economy.
Benefits of investing in Banking and Finance Sector Mutual Funds
There are a lot of benefits of investing in the Banking and Finance Sector mutual funds. They are as follows:
- Financial sector governed by RBI: All the activities carried out in the financial sector are governed by the RBI (Reserve Bank of India). RBI is a government undertaking and is a always formulating rules keeping in mind the welfare of the people and organizations. With a governance of a government body there are less chances of treachery by the banking institutions. Thus, investment made through Banking and Finance Sector mutual funds are very much secure.
- Phenomenal growth rate: The Banking and Finance Sector mutual funds provide a very high growth rate as it invests in the prime players of the banking sector. The banking institutions lie in the large-cap category of equity and are generally the star performers of their sector.
- Long-term benefit: The investors who can hold their money for a longer period of time (say. 5-7 years) should go for investing in Banking and Finance Sector mutual funds. This scheme performs well only in the long run. With high risks involved Banking and Finance Sector mutual funds are known to give fairly good returns to its investors over a long period of time.
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