Public sector undertaking (PSU) stocks have been among the biggest market performers in recent years, and that rally has clearly been reflected in PSU-focused mutual funds too. One such scheme that has stood out is the SBI PSU Fund Direct Plan, which has delivered strong returns over both the medium and long term, making it one of the top-performing SBI mutual funds in its category.
The sharp rally in PSU stocks over the past few years was driven by multiple factors — record government infrastructure spending, balance sheet clean-up in public sector banks, improving earnings visibility, and policy initiatives such as the Atma Nirbhar Bharat push that supported domestic manufacturing and capital expenditure-led growth.
Against this backdrop, SBI PSU Fund has emerged as a strong performer among thematic PSU funds.
SBI PSU Fund returns: How much has it delivered?
Over the last 3 years, SBI PSU Fund Direct Plan has delivered a 31.95% CAGR, making it one of the top-performing PSU thematic funds in the category.
To put that in perspective, Rs 1 lakh invested three years ago would have grown to nearly Rs 2.3 lakh.
Its long-term performance has also remained impressive. Over the last 5 years, the fund has delivered a 25.66% CAGR, which means Rs 1 lakh invested five years ago would now be worth around Rs 3.13 lakh.
Performance snapshot
| Period | Return | Investment Value |
| 3 years | 31.95% CAGR | Rs 2.3 lakh (on Rs 1 lakh lump sum) |
| 5 years | 25.66% CAGR | Rs 3.13 lakh (on Rs 1 lakh lump sum) |
How does the SBI PSU Fund compare with its peers?
Among PSU thematic mutual funds, SBI PSU Fund has been one of the strongest performers.
3-year performance: Among the top-performing PSU thematic funds with 31.95% CAGR
5-year performance: Second-best in the category with 25.66% CAGR
Top peer: Aditya Birla Sun Life PSU Equity Fund Direct Plan delivered 25.94% CAGR over 5 years
Interestingly, when compared with the broader thematic PSU category average, the SBI PSU Fund has outperformed in the shorter term.
The Thematic PSU category delivered 29.10% CAGR over 3 years, lower than the SBI PSU Fund’s 31.95%.
However, over 5 years, the category average stood at 26.08%, slightly ahead of SBI PSU Fund’s 25.66%.
That suggests the fund has recently gained stronger momentum.
SIP investors also saw healthy gains
The scheme has also rewarded disciplined SIP investors.
A monthly SIP of Rs 10,000 for 3 years would have grown to around Rs 4.70 lakh, delivering 18.24% XIRR.
For long-term SIP investors, the gains look even stronger.
A Rs 10,000 monthly SIP for 5 years would have grown to approximately Rs 11.31 lakh, with an XIRR of 25.7%.
| SIP Duration | SIP Amount | Return | Corpus |
| 3 years | Rs 10,000/month | 18.24% XIRR | Rs 4.70 lakh |
| 5 years | Rs 10,000/month | 25.7% XIRR | Rs 11.31 lakh |
SBI PSU Fund details
Launched in January 2013, SBI PSU Fund is a thematic equity mutual fund that primarily invests in public sector companies.
Key details:
| Particulars | Details |
| Launch date | January 2013 |
| AUM | Rs 6,676.36 crore |
| Benchmark | BSE PSU TRI |
| Additional benchmark | BSE Sensex TRI |
| Fund manager | Rohit Shimpi |
| Fund manager since | June 2024 |
| Expense ratio | 0.85% |
| Risk category | Very High |
| (Source: Value Research) |
SBI PSU Fund has concentrated exposure to PSU-heavy sectors such as Energy & Utilities, Financials, Industrials and Materials.
Its top holdings include: State Bank of India, Power Grid Corporation, GAIL (India), NTPC, and Bharat Electronics.
This portfolio positioning means the fund is closely tied to the performance of government-linked sectors.
Risk profile: Strong returns, but volatility remains high
SBI PSU Fund falls in the Very High Risk category.
That means investors should be prepared for sharp swings in returns, especially because thematic funds are far more concentrated than diversified equity schemes.
Still, its risk-adjusted metrics remain fairly strong. The fund’s mean return stands at 30.82%, while its Sharpe ratio of 1.09 and Sortino ratio of 1.78 indicate that returns have reasonably compensated investors for the risk taken.
Its beta of 0.93 suggests volatility broadly in line with the market, while a positive alpha of 1.12 indicates some benchmark outperformance on a risk-adjusted basis.
However, the standard deviation of 22.93% also shows that price swings can be significant.
Should you invest in the SBI PSU Fund?
A thematic PSU fund is not for everyone.
It may suit investors who have an aggressive risk appetite, can stay invested for at least 5–7 years, want tactical exposure to the PSU theme, and already have a diversified core portfolio.
A word of caution
Strong past returns can look tempting, especially after a sharp sector rally. But thematic funds often move in cycles. What performs exceptionally in one market phase can underperform for years in another.
PSU funds are highly concentrated bets linked to policy direction, government spending, sector-specific reforms, and market sentiment. If the PSU rally loses steam, returns may cool sharply.
For first-time investors or conservative investors, diversified options such as flexi-cap funds, index funds, or large-cap funds may offer a more balanced route with relatively lower volatility.
Past performance does not guarantee future returns. Investment decisions should be aligned with your financial goals, time horizon, and risk appetite.
Disclaimer: Past performance is not indicative of future returns. Mutual fund investments are subject to market risks, and returns can vary depending on market conditions, fund strategy, and investment tenure. The returns mentioned in this article are based on historical data for regular plans and are meant for informational purposes only, not as investment advice or recommendations. Investors should assess their financial goals and risk appetite, and consult a qualified financial advisor before making investment decisions.
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