As 2026 begins, government reforms and heavy investments in public sector companies (PSUs) present opportunities for long-term growth. One effective way to capitalize on this is through PSU mutual funds, and the SBI PSU Fund stands out as a top choice.
With over 80% of its portfolio in major PSUs like NTPC, SBI, and GAIL, this fund has delivered impressive SIP returns—over 30% in 3 and 5 years—surpassing benchmarks.
But is it right for your 2026 portfolio? This SBI PSU Fund review explores performance, strategy, holdings, and risks to help you make an informed decision.
Overview of SBI PSU Fund
Launched on July 7, 2010, by SBI Mutual Fund, the SBI PSU Fund is an open-ended equity scheme focusing on long-term capital growth. It invests primarily in equity and debt instruments of PSUs (government-owned companies and subsidiaries).
Key Details:
| Factor | Value |
|---|---|
| AMC | SBI Mutual Fund |
| AUM | ₹5,813.27 Cr (Dec 2025) |
| Current NAV | ₹37 (Jan 14, 2026) |
| Benchmark | BSE PSU Total Return Index |
| Expense Ratio | 0.83% |
| Exit Load | 0.50% (<30 days) |
| Risk Level | Very High |
| Minimum SIP | ₹500 |
| Minimum Lump Sum | ₹5,000 |
The fund is classified as “Very High” risk due to its sector-specific focus.
5-Year Rolling Return and SIP Return
The fund has consistently outperformed its benchmarks in SIP returns:
- 3-year SIP return: 21.29%
- 5-year SIP return: 25.53%
- Benchmark (Nifty 50 TRI) for 3-year: 11.8%, 5-year: 12.37%
Rolling Returns:
- 3-year: 9.42% (vs benchmark 9.34%)
- 5-year: 7.06% (vs benchmark 6.72%)
While rolling returns are moderate, SIP performance is outstanding, making it ideal for systematic investors.
Pro Tip: Use a SIP Calculator to estimate future returns.
SBI PSU Fund Investment Strategy
The fund follows a thematic PSU growth strategy, focusing on:
- Long-term capital appreciation through equity of PSUs
- Diversified sectors: infrastructure, energy, and finance
- Balance of large-cap stability with selective mid and small-cap growth
- Capitalizing on government reforms and PSU capex cycles
This strategy ensures steady performance while targeting high-potential PSU companies.
Portfolio Review 2026: Asset & Market Allocation
Asset Allocation (Dec 2025):
- Domestic PSU equities: 97.12%
- Debt: 0.08%
- Cash: 2.8%
Market Cap Allocation:
- Large-cap PSUs: 82.30%
- Mid-cap: 14.57%
- Small-cap: 3.13%
The fund balances stable large-cap exposure with selective mid-cap opportunities, enhancing long-term growth potential.
Sector Allocation
- Energy & Utilities: 43.19% (Power Grid Corp, GAIL)
- Financial Services & Industrials: Moderate allocation for banking, defense, manufacturing growth
- Materials: 6.69%
This focused approach leverages government-driven growth while managing risk.
Top Holdings of SBI PSU Fund
The top 5 holdings make up ~51% of the portfolio:
| Stock | Allocation (%) |
|---|---|
| State Bank of India | 16.76–16.87% |
| Bharat Electronics Ltd | 8.91–9.27% |
| NTPC Ltd | 8.24–8.75% |
| GAIL (India) Ltd | 8.63% |
| Power Grid Corp of India | 8.02% |
Is SBI PSU Fund Good for Long-Term Investment?
The fund is riskier due to its sector concentration, but fundamentals are strong:
| Fundamental Ratios | Values |
|---|---|
| Sales Growth | 9.45% |
| Earnings Growth | 6.69% |
| Cash Flow Growth | -8.82% |
| P/E Ratio | 11.45 |
- Suitable for investors with 5+ year horizon
- Lower P/E ratio indicates better value
- Strong earnings and sales growth suggest long-term potential
Pro Tip: Use a SWP Calculator to plan systematic withdrawals.
The SBI PSU Fund is a strong choice among PSU-themed mutual funds. Its strategy, quality PSU stock selection, and sector-focused growth make it suitable for long-term investors who understand the risks of concentrated equity investments.
- Best for investors with 5+ year horizon
- High potential returns if government reforms and PSU investments continue
- Monitor policy changes and market trends for timely adjustments
FAQs
Q1: Should you invest in SBI PSU Fund in 2026?
A: Yes, via SIP for 5+ years; historical 3-5 year growth exceeds 30%.
Q2: Risks of SBI PSU Fund?
A: Highly volatile, sensitive to PSU policies, underperforms during private sector rallies.
Q3: When to exit?
A: If PSU reforms stall, private sector rallies >20%, or investment horizon <3 years.
Q4: Suitable for beginners?
A: Yes, if planning 5+ years with SIPs.
Q5: Future outlook 2026–2027?
A: Government plans Rs 12 lakh crore investment in public projects; potential returns 20–25% if reforms execute well.
