Bandhan Financial Services Fund delivers strong 16.24% SIP returns in first two years

Launched in July 2023, the fund has quickly carved out a space in the financial services sector with competitive returns and growing investor interest.

A Rs 10,000 monthly SIP in the fund since launch would have grown to Rs 2.81 lakh by June 2025, against a total investment of Rs 2.4 lakh. On a point-to-point basis, the fund has returned 25.97% since inception-comfortably beating its benchmark, the Nifty Financial Services TRI, which rose 17.49% over the same 23-month period.

A one-time investment of Rs 10,000 made at the fund’s inception is now worth around Rs 15,599.

As of June 2025, the fund manages Rs 1,086 crore in assets under management (AUM), making it a mid-sized player in the sectoral-banking fund category. Its portfolio is diversified across five financial services sectors and 19 sub-sectors, with 65% of assets allocated to large-cap stocks and the remaining split between mid- and small-cap companies.

The fund has actively adjusted its portfolio in recent months. In June, it marginally increased exposure to finance and insurance segments while trimming positions in banks and fintech firms. Recent stock additions include Aptus Value Housing Finance, HDB Financial Services, Bank of Baroda, Canara Bank, and IDFC First Bank.

Despite the fund’s impressive alpha generation so far, experts urge caution. Sectoral and thematic funds like this are inherently more volatile and cyclical than diversified equity funds. Returns are closely tied to regulatory shifts, interest rate movements, and the health of the banking and credit environment.

Financial planners advise investors to assess their risk appetite and avoid heavy exposure to a single sector. Sectoral funds may work best as satellite allocations rather than core portfolio holdings.

Performance snapshot

As of August 1, 2025, the fund’s Net Asset Value (NAV) stands at ₹14.92, with a low expense ratio of 0.6%. The fund has returned 10.89% over the past year and 23.03% over two years-both above the category average. For context, the fund has slightly underperformed the category over one and three months but delivered strong numbers over longer durations.

Peer comparison

Among its competitors, SBI Banking & Financial Services Fund and Nippon India’s scheme have larger AUMs but also come with higher expense ratios. Bandhan’s lower costs and two-year track record suggest it’s gaining traction among investors looking for targeted exposure to India’s financial sector.

Among its peers, Bandhan Financial Services Fund stands out for its low 0.6% expense ratio, despite being newer. While SBI and Nippon India funds have significantly larger AUMs, they also come with higher costs. Bandhan’s competitive returns and lean structure make it an attractive option for cost-conscious investors seeking focused sector exposure.