Bandhan Financial Services Fund

The Bandhan Financial Services Fund has delivered a 1-year SIP XIRR of 14.64%, slightly above the category average of 14.1%, and a 3-year SIP XIRR of 10.28%, which is notably below the category average of 16.82%. Over the long term, the fund has consistently outperformed the NIFTY 50 benchmark, with a 3-year fund CAGR of 17.25% versus the benchmark's 7.75%, and positive alpha across all time periods. However, the fund's 1-year CAGR of 3.9% is modest, though it still beats the benchmark's -2.9%.

The fund exhibits moderate volatility with a beta of 1.04-1.16 relative to the NIFTY 50, indicating slightly higher sensitivity to market movements. Its maximum drawdown is -17.31%, with an average drawdown of -3.4%, and it has experienced two drawdown events exceeding 10%, suggesting meaningful downside risk. The Calmar ratios of 0.90 (1Y) and 0.99 (3Y) indicate reasonable risk-adjusted returns, but the fund has not yet recovered from its maximum drawdown, which lasted 83 days.

As a sectoral/thematic fund focused on financial services, the portfolio is concentrated in banking, financial services, and insurance stocks, which inherently limits diversification. The fund's performance is closely tied to the financial sector's health, making it sensitive to regulatory changes and interest rate movements. Investors should be aware that this concentration can lead to higher volatility compared to diversified equity funds.

The fund's 1-year SIP XIRR is slightly above the category average, but its 3-year SIP XIRR significantly lags the category average by over 6 percentage points, indicating underperformance in the medium term. Calendar year returns show variability, with strong gains in 2024 (20.29%) and 2025 (12.9%), but a negative return in 2026 (-1.52%), reflecting inconsistent performance. The fund's long-term alpha over the benchmark is positive but narrows over longer horizons, suggesting that its outperformance may diminish over time.

This fund is suitable for investors with a high risk tolerance and a long-term investment horizon of at least 5-7 years, who are comfortable with sector concentration and potential drawdowns. It is best suited for those who have a positive outlook on the financial services sector and are seeking thematic exposure rather than broad market diversification. Investors should be prepared for periods of underperformance relative to the category, as evidenced by the 3-year SIP XIRR lag.

• Consistent outperformance over the NIFTY 50 benchmark across all time periods, with positive alpha and higher upside capture (106-114%).
• Lower downside capture (95-104%) compared to upside capture, indicating the fund tends to lose less in down markets relative to the benchmark.
• Low expense ratio of 0.63% for a direct plan, which is cost-effective for investors.

• Significant underperformance in 3-year SIP XIRR (10.28%) versus the category average (16.82%), indicating a lack of consistency relative to peers.
• High sector concentration in financial services, leading to elevated risk and a maximum drawdown of -17.31% with no recovery yet, which may test investor patience.