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What Are Banking and PSU Funds & Who Should Invest?

This blog will help you understand what a Banking and PSU fund invests in, how it works, its advantages and limitations, and how to invest in the best Banking and PSU funds using Cube Wealth.
November 8, 2024
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You may be familiar with the age old Indian dream of getting a job at a PSU and living happily ever after. But you don’t necessarily have to work in a PSU to reap the benefits. 

Meet Banking and PSU funds. Banking and PSU funds are open-ended debt schemes that are considered to be safer than many other debt funds due to the nature of their investments. 

In this blog, we’ll look at every pertinent detail of Banking and PSU funds so that you can understand if it’s a suitable investment option for you. 

Features Of Banking and PSU Debt Funds

A Banking & PSU debt fund invests in debt instruments of banks like NABARD, HDFC, Bank Of Baroda, etc. and Public Sector Undertakings like BPCL, Indian Oil Corporation, Oil and Natural Gas Corporation, etc.  

Banking & PSU debt funds have negligible credit risk since they invest in bonds and debentures of public sector companies and banks that have a very high credit rating (AAA/A1+ rated). 

However, Banking & PSU debt funds are prone to interest rate fluctuations which have an impact on the NAV and returns. The fluctuations can be attributed to RBI’s repo and reverse repo rates.  

But Banking & PSU funds are widely considered to be safer than other debt funds like arbitrage funds and dynamic bo

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