Canara Robeco Mutual Fund has launched the Canara Robeco Banking and Financial Services Fund, an open-ended sectoral equity scheme focused on companies operating in the banking and financial services space.
The new fund offer (NFO) will open on February 27 and close on March 13.
Canara Robeco Mutual Fund is one of India’s older private sector asset managers, backed by Canara Bank and Netherlands-based asset manager Robeco. The fund house manages a diversified basket of equity, debt and hybrid schemes and follows a blend of fundamental research and risk-managed portfolio construction. It has built a presence across retail and institutional segments, with a focus on long-term wealth creation.
A banking and financial services fund is a sectoral mutual fund that primarily invests in companies operating within the financial ecosystem. These typically include:
• Public and private sector banks
• Non-banking financial companies (NBFCs)
• Housing finance companies
• Insurance firms
• Asset management companies
• Capital market intermediaries and fintech players
Such funds are mandated to invest a minimum portion — in this case, at least 80 percent — of their assets in stocks of companies from the banking and financial services sector. Because the portfolio is concentrated in a single sector, returns are closely linked to credit growth, interest rate cycles, regulatory changes and overall economic activity.
While sectoral funds can deliver strong gains during favourable cycles — such as periods of rising credit demand, improving asset quality or financialisation of savings — they also carry higher volatility and concentration risk compared to diversified equity funds.
The Canara Robeco Banking and Financial Services Fund aims to capitalise on structural shifts in India’s credit landscape, including early credit adoption, a longer credit life cycle and improved access to formal finance.
The scheme will allocate at least 80 percent of its total assets to equity and equity-related instruments of companies engaged in banking and financial services. The remaining portion may be invested in other equities, debt and money market instruments, as well as InvITs.
Rajnish Narula, MD and CEO of Canara Robeco AMC, said banking and financial services remain central to India’s growth story. “With this NFO, we are giving investors a direct opportunity to participate in that momentum,” he said.
Shridatta Bhandwaldar, chief investment officer, said the fund will focus on building a portfolio that balances growth opportunities with value, while tracking shifts in profit pools within the broader financial ecosystem.
Given the cyclical nature of the sector, investors may consider such schemes as tactical allocations within a well-diversified portfolio rather than core holdings.
