Amid a strong performance by Public Sector Undertaking (PSU) theme-based funds, investors must be contemplating whether now is the right time to increase their Systematic Investment Plan (SIP) allocations.
Over the last five years, these funds have delivered an average return of 28.04%, and recent trends suggest continued outperformance by PSU stocks.
The market capitalisation of PSU stocks has seen a dramatic rise, escalating from approximately ₹13.5 lakh crore in March 2020 to around ₹75 lakh crore.
This growth has led to a sixfold increase in the government's holdings, from ₹8.3 lakh crore to nearly ₹50 lakh crore, as noted by Madhusudan Kela, founder of MK Ventures.
"PSUs are contributing immensely to India's growth story, now accounting for around 18% of the Indian market cap compared to about 12% in March 2020. These numbers clearly highlight the cultural shift, the initiatives taken by the government, and a renewed focus on being investor-friendly," Kela added.
Performance metrics and fund analysis
In the past year, various PSU funds have shown remarkable returns.
According to Value Research, notable performers include:
CPSE ETF: A staggering 114.04% return, ranking 1/5 in its category.
Aditya Birla Sun Life PSU Equity Fund - Direct Plan:
Invesco India PSU Equity Fund - Direct Plan: Delivered a 104.47% return, ranking 2/4.
SBI PSU Fund - Direct Plan: Posted a 105.90% return, ranking 1/4.
These funds carry a "Very High" risk rating but have significantly rewarded investors who assumed this risk.
Investment considerations
Nilay Dalal, Fund Manager at ITI Mutual Fund, advised investors to consider topping up their SIPs, taking into account their current investments, income changes, and savings rate.
"We remain positive on the PSU sector as in our assessment, the Indian economy is at the start of an economic cycle, with a favorable economic environment and increased capital expenditure," he told CNBC-TV18.com.
Dalal highlighted the government's focus on indigenisation, increased exports, and infrastructure improvements as key drivers behind the sector's recent success.
These initiatives are expected to sustain the momentum in PSU stocks.
However, as always, it's essential for investors to assess their risk tolerance and investment horizon before making any adjustments.
ALSO READ | Infrastructure funds soar with 74% annual returns: Are they a good bet for investors now?
Over the last five years, these funds have delivered an average return of 28.04%, and recent trends suggest continued outperformance by PSU stocks.
The market capitalisation of PSU stocks has seen a dramatic rise, escalating from approximately ₹13.5 lakh crore in March 2020 to around ₹75 lakh crore.
This growth has led to a sixfold increase in the government's holdings, from ₹8.3 lakh crore to nearly ₹50 lakh crore, as noted by Madhusudan Kela, founder of MK Ventures.
"PSUs are contributing immensely to India's growth story, now accounting for around 18% of the Indian market cap compared to about 12% in March 2020. These numbers clearly highlight the cultural shift, the initiatives taken by the government, and a renewed focus on being investor-friendly," Kela added.
Performance metrics and fund analysis
In the past year, various PSU funds have shown remarkable returns.
According to Value Research, notable performers include:
CPSE ETF: A staggering 114.04% return, ranking 1/5 in its category.
Aditya Birla Sun Life PSU Equity Fund - Direct Plan:
Achieved a 98.77% return, ranking 3/4.
Invesco India PSU Equity Fund - Direct Plan: Delivered a 104.47% return, ranking 2/4.
SBI PSU Fund - Direct Plan: Posted a 105.90% return, ranking 1/4.
These funds carry a "Very High" risk rating but have significantly rewarded investors who assumed this risk.
Investment considerations
Nilay Dalal, Fund Manager at ITI Mutual Fund, advised investors to consider topping up their SIPs, taking into account their current investments, income changes, and savings rate.
"We remain positive on the PSU sector as in our assessment, the Indian economy is at the start of an economic cycle, with a favorable economic environment and increased capital expenditure," he told CNBC-TV18.com.
Dalal highlighted the government's focus on indigenisation, increased exports, and infrastructure improvements as key drivers behind the sector's recent success.
These initiatives are expected to sustain the momentum in PSU stocks.
However, as always, it's essential for investors to assess their risk tolerance and investment horizon before making any adjustments.
ALSO READ | Infrastructure funds soar with 74% annual returns: Are they a good bet for investors now?
Note To Readers
The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
First Published: May 29, 2024 2:14 PM IST
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
