MF Tracker: Can This 3 and 5 Year Top Performer PSU Fund Extend Its Winning Streak?
The SBI PSU Fund has emerged as a leading performer in the equity mutual fund sector, achieving the highest compounded annual growth rates (CAGR) over both three and five-year periods. But can this PSU rally maintain its momentum in the wake of Budget 2026?
SBI PSU Fund Performance Overview
– Top Performer: The SBI PSU Fund, managed by SBI Mutual Fund, boasts a CAGR of 32.14% over the last three years and 28.74% over the past five years (Source: ACE MF).
– Consistent Outperformance: The fund significantly outpaced its category averages of 30.60% and 27.94% for the same timeframes.
Fund Characteristics
– Inception and Rating: Launched in July 2010, the fund currently lacks a rating from Morningstar and Value Research due to limited funds in the PSU category.
– Historical Performance: While it has shown substantial growth over three and five years, it has not outperformed its benchmark over the last ten years. The fund has delivered a CAGR of 8.35% since its inception.
– Rolling Returns: Daily rolling returns indicate a CAGR of 15.23% over the last five years and 8.27% in the last seven years.
Investment Strategies and Insights
– Portfolio Growth: A monthly SIP since inception would have grown to Rs 59.25 lakh with an XIRR of 13.67%. A lump sum investment of Rs 1 lakh would have reached Rs 3.48 lakh with a CAGR of 8.34%.
– Performance Drivers: Fund Manager Rohit Shimpi attributes the fund’s success to the robust performance of PSU stocks, spurred by an earnings revival and positive valuation dynamics.
– Key Contributors: Major contributors to the fund’s performance include PSU banks, financial institutions, defense, energy, and metals, benefitting from improved asset quality and a positive commodity cycle.
Market Outlook Post Budget 2026
– Recent Volatility: Following Budget 2026, PSU bank stocks saw a sharp correction, hinting at a cautious near-term outlook. Investors should note the sensitivity of PSU stocks to policy changes.
– Long-term Perspective: Despite short-term fluctuations, the structural growth narrative for PSUs remains intact, especially with government support in critical sectors like infrastructure and defense.
Expert Opinions on SBI PSU Fund
– Outperformance Reflection: Experts praise the fund’s ability to consistently outperform its category, crediting favourable macroeconomic conditions and strategic portfolio positioning.
– Concentration Strategy: Emphasis on core segments such as financial services and energy has made a substantial contribution to the fund’s success. Highly concentrated top holdings have enhanced returns during bullish market phases.
Risk Considerations
– Investment Style and Ratios: The fund reported a PE ratio of 19.66, a PBV ratio of 3.12, and a dividend yield of 2.39% as of December 2025. It primarily focuses on growth-oriented stocks across large-cap markets.
– Diversification is Key: Investors are advised to limit their exposure to PSU funds due to their high-risk profile, ideally keeping it to around 10% of their overall portfolio.
Conclusion: Should You Invest Now?
The SBI PSU Fund stands at a critical intersection following Budget 2026. While the long-term story of stability and growth remains, investors should adopt a selective approach. With heightened volatility expected, it’s essential to reassess risk tolerance and investment goals. The current environment calls for prudent, disciplined strategies to effectively navigate the evolving landscape of PSU funds.
By focusing on careful portfolio construction and recognizing the unique opportunities within the PSU space, investors can potentially benefit from this dynamic sector while managing associated risks.