- Indian mutual funds attract strong investor interest, boosting sectoral funds.
- Financial services funds invest in banks, NBFCs, benefiting economic growth.
- Five financial services funds posted strong one-year returns.
India’s Mutual Fund industry has continued to attract strong investor interest as more retail investors turn to equity markets through systematic investments. The growing participation has made mutual funds one of the preferred investment avenues, with domestic inflows playing an increasingly important role in the equity market. Within the equity mutual fund space, sectoral funds have also gained attention.
These schemes invest in a specific segment of the market, allowing investors to take exposure to sectors they believe have long-term growth potential. Under SEBI’s guidelines, sectoral funds are required to invest at least 80 per cent of their assets in companies belonging to a particular sector.
One such category is financial services mutual funds. These schemes primarily invest in Banks, non-banking financial companies (NBFCs), insurance companies, asset management companies and other financial institutions. Since the financial sector plays a key role in credit growth, economic activity and capital markets, these funds often benefit when the broader economy expands.
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However, because their portfolios are concentrated in a single sector, their performance is also influenced by interest rate movements, regulatory changes and the overall health of the banking industry. Against this backdrop, here is a look at the five best-performing financial services mutual funds based on their one-year returns as of July 7, 2026.
Top 5 Financial Services Mutual Funds
Fund Name One-Year Return (in per cent)
Quant BFSI Fund 20.43
DSP Banking & Financial Services Fund 11.42
Groww Banking & Financial Services Fund 8.53
HSBC Financial Services Fund 8.31
ITI Banking and Financial Services Fund 7.60
Investors should note that financial services funds are sectoral mutual funds and generally carry higher risk than diversified equity schemes. Their returns depend largely on the performance of the banking and financial services sector, making them suitable for investors with a higher risk appetite and a long-term investment horizon.
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