In recent months, Public Sector Undertaking (PSU) stocks have shown impressive growth, making them a lucrative option for investors. The government’s increasing focus on strengthening public sector companies has led to a boom in these stocks. As a result, the BSE PSU index has surged by nearly 70% in the last year and by 163% in the past three years.
If you’re looking to include high-performing PSU stocks in your investment portfolio, PSU-themed mutual funds are an excellent option. These funds focus on government-owned companies across different sectors, providing investors with exposure to a diversified portfolio. Let’s explore the top 5 PSU mutual funds that have delivered exceptional returns over the past year.
1. CPSE ETF
- 1-Year Return: 94.43%
- Launch Date: March 28, 2014
- Returns Since Launch: 18.28% p.a.
- Total AUM: ₹46,099 crore (as of August 31, 2024)
- Expense Ratio: 0.07% (as of August 31, 2024)
The CPSE ETF has been the top performer, delivering a whopping 94% return in the past year. The fund primarily invests in select PSUs, offering exposure to some of the biggest government companies.
2. ICICI Prudential PSU Equity Fund
- 1-Year Return: 73.47%
- Launch Date: September 9, 2022
- Returns Since Launch: 49.23% p.a.
- Total AUM: ₹2,628 crore (as of August 31, 2024)
- Expense Ratio: 0.63% (as of August 31, 2024)
Launched recently, ICICI Prudential’s PSU Equity Fund has shown strong performance, with a 73% return in just one year. It focuses on a portfolio of well-established government companies across different sectors.
3. Invesco India PSU Equity Fund
- 1-Year Return: 70.87%
- Launch Date: January 1, 2013
- Returns Since Launch: 18.67% p.a.
- Total AUM: ₹1,593 crore (as of August 31, 2024)
- Expense Ratio: 0.76% (as of August 31, 2024)
Invesco India PSU Equity Fund has a track record of consistent returns, offering around 70% in the past year and 18.67% since its launch. It invests in top-performing PSUs from various industries.
4. SBI PSU Fund
- 1-Year Return: 67.45%
- Launch Date: January 1, 2013
- Returns Since Launch: 13.27% p.a.
- Total AUM: ₹4,851 crore (as of August 31, 2024)
- Expense Ratio: 0.72% (as of August 31, 2024)
SBI PSU Fund is another top performer, offering a return of 67% in one year. With a solid portfolio of public sector companies, this fund is a stable option for long-term investors.
5. Aditya Birla Sun Life (ABSL) PSU Equity Fund
- 1-Year Return: 66.47%
- Launch Date: December 30, 2019
- Returns Since Launch: 33.11% p.a.
- Total AUM: ₹5,946 crore (as of August 31, 2024)
- Expense Ratio: 0.49% (as of August 31, 2024)
ABSL PSU Equity Fund offers a balanced portfolio, generating a 66% return in the past year and an impressive 33% annualized return since its launch. This fund is ideal for those seeking exposure to the PSU sector with good growth potential.
Why Invest in PSU Mutual Funds?
PSU mutual funds are a good investment choice for those looking to gain exposure to top-performing government companies across sectors like energy, banking, and infrastructure. By investing in these thematic funds, you get access to a diversified portfolio with the potential for high returns. However, it’s important to understand that these funds may carry concentration risks, as they focus mainly on public sector companies.
Tax Implications
- Short-Term Capital Gains: If you redeem your units within one year, you’ll have to pay a 20% short-term capital gains tax.
- Long-Term Capital Gains: Selling after a one-year holding period attracts a 12.5% long-term capital gains tax on earnings above ₹1.25 lakh.
- Dividends: Dividends are added to your total income and taxed according to the income tax slab you fall into.
