Axis Banking & PSU Debt Fund: Fund review

Axis Banking & PSU Debt Fund: Fund review


After the IL& FS crisis, investors have been cautious about debt schemes. But all is not unfavourable about investing in debt schemes. Conservative investors can consider investing in banking and PSU bonds, which park money in papers issued by commercial banks and public-sector undertakings (PSUs).

Among the schemes available in the markets, investors may consider investing in Axis Banking & PSU scheme. The scheme has been consistent in its performance and has a relatively long performance record. There are three important reasons for considering investment in the scheme. One, it invests in AAA-rated papers, which offers more than reasonable level of security to conservative investors. Second, the tenure of the bonds selected for investment is between two to four years. Experts point out that in the next fiscal, one can see a couple of rate cuts by Reserve Bank of India (RBI), which should work in boost the scheme’s returns. Third, the scheme’s investments in PSU bonds should benefit from RBI’s buying bonds through open-market operations. In the past threeand five-year periods, the scheme has given 8% and 8.25% returns, while its category of schemes have given 7.5 and 8% returns in the same period respectively.

Portfolio composition (%)

Bank-public 31.67
Finance Term Lending 14.45
Finance- investment 10.01
Refineries 9.46
Power generation/ distribution 8.79
Engineering- construction 7.58
Trading 7.43
Finance- housing 7.09
G-sec 2.12
Finance- NBFC 2.05
Miscellaneous 0.47
Other -1.13

Returns (in %)

Period CAGR return SIP CAGR Return Banking & PSU Fund-
AVG CAGR return
1 year 8.35 10.76 7.23
3 year 7.92 8.26 7.48
5 year 8.25 8.36 7.96

Returns- peer comparison (in %)

Scheme 1-year 3-year 5-year
ABSL Banking & PSU Debt Fund 7.39 8.23 9.01
L&T Banking & PSU Debt Fund 6.42 7.31 7.62
LIC MF Banking & PSU Debt Fund 8.13 7.35 7.09