Investors Flock To BFSI Mutual Funds As Sector Delivers Up To 30 Per Cent Returns

Industry data showed that these funds have delivered returns ranging from 22 to 30 per cent over the past year, highlighting the sector's robust fundamentals and growing appeal.

The sharp rise suggests growing investor confidence in the long-term potential of the BFSI (Banking, Financial Services, and Insurance) sector.

Source : ABPLIVE AI

Investment in banking and financial services sector-based mutual funds jumped 37 per cent year-on-year to Rs 48,000 crore in May 2025.

The surge in assets is backed by the strong performance of the segment. Industry data showed that these funds have delivered returns ranging from 22 to 30 per cent over the past year, highlighting the sector's robust fundamentals and growing appeal.

According to the industry data, there are currently 22 banking and financial services mutual funds in the Indian market, managing a combined assets under management (AUM) of Rs 48,000 crore in May 2025 against about Rs 34,971 crore in May 2024.

The sharp rise suggests growing investor confidence in the long-term potential of the BFSI (Banking, Financial Services, and Insurance) sector.

The BFSI sector, which holds the distinction of being the largest by market capitalisation in India's listed space, has remained resilient amid recent market volatility. BSE financial services index has gained nearly 14 per cent in the first three months of the current financial year alone, while BSE Bankex rose 10 per cent during the period under review.

Moreover, the BFSI space is likely to expand further with unlisted players in insurance, fintech, wealth management, and digital lending expected to access public markets. This trend will further broaden the investment landscape within the sector and encourage wider market participation.

"India's BFSI sector is no longer just about traditional banking -- it's a gateway to participate in the country's digital financial revolution.

"With the formalisation of the economy, rising retail participation, and a strong pipeline of quality players, this space offers long-term structural potential. For investors looking to build wealth over time, a dedicated BFSI fund with an actively managed, fresh portfolio can be a smart and timely allocation," Alpa Shah, a wealth manager, said.

In line with this growing momentum, Mahindra Manulife Mutual Fund recently launched the Mahindra Manulife Banking and Financial Services Fund on June 27. The new fund offer (NFO) is open until July 11 and aims to provide investors with an opportunity to participate in the sector's growth story through a portfolio aligned with current market dynamics.

For investors seeking targeted exposure to India's financial transformation, a measured allocation to such funds -- with a minimum investment horizon of 3 to 5 years -- can be a prudent move, fund managers suggested. 

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)