Should you enter banking sector funds now?

Recent market correction which has been an eye opener for the investors who were in the hallucination of bull run in the past couple of years and were expecting very high returns from the equity funds. In the recent past almost every category except IT has witnessed erosion in the returns.

Post that in the month August markets have recovered well and also managed to hit its new all time high which has given a hope to investors for the equity funds. Currently every investor have all the categories on their watchlist to invest in the perfect fund to reap higher returns.

If we see the recent performance of the categories in the last one month the banking sector funds have performed exceptionally well than any other equity fund categories. The category has offered return of 5.04% which is further followed by equity large cap and large and midcap category  with the returns of 3.29% and 3.6% respectively.

Banking sector has witnessed a good quarter recently. Almost all the results for corporate banking side are in line with the expectations. Many exoerts believe the public sector banks are burdened with their non performing assets and bad loans where as private sector banks have seen a great recovery on the bad loans in the latest quarter.

As far as long term perspective is considered the banking sectors forms a great option for the long term investment but one should always consider the diversified funds which have higher weightage towards banking sector if they want to bet on the sector. However sectoral funds are much more risky than that of diversified funds so while investing in the sector fund one should always consider the risks involved in it. And investors should also allocate assets towards sector fund wisely to protect the returns.