Banking funds best performing schemes across all categories

Mumbai, July 26 | Updated: Jul 27 2006, 05:30am hrs
Banking sector funds, with average return of 7.51% in the week to Tuesday, emerged as the best performing schemes across all fund categories. However, these funds could not beat the CNX Bankex that rose 11.48% over the week. Monday alone, the index rose 3.8% following the Reserve Bank of Indias decision to raise capital overseas.

RBI said last Friday that banks can raise up to 49% of entitled hybrid tier I or innovative perpetual debt in foreign currency and 25% of unimpaired Tier I through upper tier II capital.

The Central Banks decision to raise repo and reverse repo rates by 25 basis points each did not dampen spirits, as the hike was in line with expectations and also because RBI maintained its inflation target at 5-5.5%. Over the week, Bank of India shares surged a whopping 19.93%, followed by Oriental Bank of Commerce and Bank of India shares, which rose 18.32% and 15.2% respectively.

Syndicate Bank, ICICI Bank, Punjab National Bank, Union Bank of India and Corporation Bank ended 12-14% higher.

UTI Banking Sector and Reliance Banking Fund gave 8.31% and 6.71% returns respectively, both underperforming the CNX Bankex.

Banking BeES, an exchange traded fund from Benchmark Mutual, which invests in banking shares, gave 11.26% return, marginally less than the CNX Bankex which rose 11.48%. June-end, the top five holdings of UTI banking sector fund, which manages assets worth Rs 667.3 million were ICICI Bank, State Bank of India, UTI Bank, Housing Finance Development Corp and Karur Vysya Bank. These comprised nearly 56% of the portfolio.

Reliance Banking Fund, which manages assets worth Rs 1.13 billion, had deployed 47.26% of its corpus in its top five picks. The top five companies were SBI, Bank of Baroda, ICICI Bank, Punjab National Bank, and Federal Bank.

Banking BeES manages assets worth Rs 6.2 billion. The passively managed fund had deployed 77.31% of its corpus in top five holdings, namely ICICI, SBI, HDFC, PNB, and Canara Bank. Crisil MarketWire