PSU mutual funds buck market downturn with stellar returns. While most equity funds have struggled in 2026, public sector unit focused mutual funds stand out as top performers. The category delivered 30.5% annualized returns over three years and 27.3% over five years as of March 11. State Bank of India surged 49.3% in one year, Bank of Baroda gained 42.8%, and BPCL climbed 22.9%. These PSU stocks have benefited from earnings recovery, valuation re-rating from historically low levels, and strong government policy support. Among seven available PSU equity funds, the best performer gained nearly 29% annually while the worst declined about 5.6%. However, investors face limited options with only a handful of funds available, and portfolios remain heavily concentrated in PSU banks and energy sector companies.
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