HDFC Bank fell 26% in the last 1 year while SBI gained: Which mutual funds are betting big on the top 5 lenders?

India’s largest banks by market capitalisation have delivered sharply different returns over the past year. While HDFC Bank has declined 26%, SBI has gained 26%, highlighting the divergence within the banking space.

But for mutual fund investors, another question matters: which actively managed mutual funds have the highest allocation to these banking giants?

Excluding index funds and ETFs, the data shows that several banking and financial-services sector funds have sizeable exposure to the country’s largest lenders.

The performance gap is significant. SBI delivered the highest one-year return at 26%, followed by Axis Bank at 20%. Kotak Mahindra Bank gained 7%, while ICICI Bank was broadly flat with a 2% return. HDFC Bank was the clear laggard, falling 26%.

For investors, this shows why simply investing in the banking sector does not guarantee similar returns across individual stocks. Fund performance can also differ depending on which banks a portfolio manager owns and how much they allocate to each.

UTI Banking and Financial Services has the highest exposure to HDFC Bank at 17.28%, followed closely by SBI Banking & Financial Services at 16.97%.

This is important for investors because HDFC Bank’s sharp one-year decline could have had a relatively larger impact on funds with such high allocations.

Taurus Banking & Financial Services has the highest ICICI Bank allocation at 17.22%.

Since ICICI Bank gained only 2% over the period, the stock’s contribution to these funds would have been relatively modest compared with funds that had higher exposure to SBI or Axis Bank.

Which mutual funds have the highest stake in SBI?

SBI stands out among the five banks with a 26% one-year gain. Funds with sizeable SBI exposure had a potential positive contributor to returns.

Interestingly, the highest allocations are around 9%, considerably lower than the top allocations seen for HDFC Bank and ICICI Bank.

Which mutual funds have the highest stake in Kotak Mahindra Bank?

Kotak Mahindra Bank gained 7% over the past year. SBI Banking & Financial Services has the highest exposure at 9.68%, while UTI Banking and Financial Services has 8.81%.

Axis Bank gained 20% over the past year, making it the second-best performer among these five banks. UTI Banking and Financial Services again appears among the funds with the highest exposure, with a 9.69% allocation.

What should investors take away?

For retail investors, the key takeaway is simple. When comparing similar category funds, look beyond the fund name and check the actual portfolio.

Two funds in the same category can take very different bets on the same banking stocks, and that can materially affect their risk and returns.

Disclaimer: This is purely for educational/informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.