Public Sector Undertaking (PSU) mutual funds have emerged as a standout category in the Indian investment landscape. These thematic funds primarily invest in companies where the government holds a majority stake, such as State Bank of India, NTPC and Bharat Electronics. <\/p>\n\n\n\n
PSU mutual funds<\/strong> have continued to defy broader market slumps, recording some of the highest three-year and five-year returns across all equity categories. Their appeal lies in the structural reforms, aggressive government capital expenditure (capex) and improved corporate governance within these state-owned giants.<\/p>\n\n\n\n <\/p>\n\n\n\n <\/p>\n\n\n\n PSU mutual funds<\/strong> are specialised investment vehicles that allocate capital to companies where the Central or State governments hold a stake. These firms span critical sectors like energy, defence, banking and infrastructure.<\/p>\n\n\n\n <\/p>\n\n\n\n There are two primary ways to access this segment:<\/p>\n\n\n\n <\/p>\n\n\n\n The primary point of distinction is from ownership and concentration in particular sectors. The fact that a flexi-cap fund that has been diversified would invest even in privately owned companies such as HDFC Bank or Reliance, PSU mutual funds would strictly stick only to the public sector. They become susceptible to shifts in governmental policies as opposed to non-PSU mutual funds.<\/p>\n\n\n\n <\/p>\n\n\n\n As of April 2026, the following schemes are among the top performers based on their 3-year returns and AUM size.<\/p>\n\n\n\n <\/p>\n\n\n\n Disclaimer: The above data is as of April 14, 2026 and subject to change.<\/em><\/p>\n\n\n\n <\/p>\n\n\n\n Before looking for the best PSU mutual fund<\/strong>, investors should evaluate the following:<\/p>\n\n\n\n <\/p>\n\n\n\n The primary advantage of a PSU equity fund<\/strong> is the exposure to “Maharatna” and “Navratna” companies that dominate India’s core economy. These companies often have massive order books and “moats” created by government monopolies or high entry barriers.<\/p>\n\n\n\n <\/p>\n\n\n\n Despite recent successes, PSU funds<\/strong> carry specific risks:<\/p>\n\n\n\n <\/p>\n\n\n\n Investing in a PSU equity fund<\/strong> is straightforward through digital platforms or AMC websites.<\/p>\n\n\n\n <\/p>\n\n\n\n The outlook for PSU mutual funds<\/strong> remains tied to India\u2019s capex cycle. Experts predict that as the government increases infrastructure spending towards 2027, companies in defence and energy will continue to see strong order inflows. However, investors are cautioned that the “easy gains” from valuation expansion may be over; future returns will likely be driven by actual earnings delivery.<\/p>\n\n\n\n <\/p>\n\n\n\n In recent times, PSU mutual funds have emerged as an option that\u2019s here to stay. Over the last five years, they have provided exemplary returns irrespective of whether one opts for an aggressive PSU equity mutual fund or a conservative debt-oriented mutual fund scheme. These funds are an excellent avenue for people who want to be a part of India\u2019s growth story. <\/p>\n\n\n\n <\/p>\n\n\n\n The major distinguishing factor is the universe of investments that the funds can engage in. PSU funds can only invest in government-owned firms while diversified funds have no such restrictions.<\/p> <\/div> Yes but they should be aware of the thematic risk. It is often recommended that beginners limit their exposure to a PSU equity fund<\/strong> to 10-15% of their total portfolio.<\/p> <\/div> Equity-oriented PSU funds<\/strong> are taxed at 20% for Short-Term Capital Gains (STCG) if held for less than 12 months. Long-Term Capital Gains (LTCG) are taxed at 12.5% for gains exceeding \u20b91.25 lakh per year.<\/p> <\/div> They provide exposure to “old economy” sectors like railways, defence and heavy engineering that are often under-represented in standard growth-oriented private equity funds.<\/p> <\/div> Yes, particularly for structural themes including the energy transition and defence indigenisation. Nevertheless, monitoring should be conducted since government policies are prone to change<\/p> <\/div> <\/div>\n\n\n\n <\/p>\n\n\n\nKey Takeaways<\/strong><\/h2>\n\n\n\n
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What Are PSU Mutual Funds?<\/strong><\/h2>\n\n\n\n
Definition and Types<\/strong><\/h3>\n\n\n\n
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Differences Between PSU and Non-PSU Funds<\/strong><\/h2>\n\n\n\n
List of PSU Mutual Funds in India<\/strong><\/h2>\n\n\n\n
Fund Name<\/strong><\/td> Category<\/strong><\/td> AUM (\u20b9 Cr)<\/strong><\/td> 3Y Returns (%)<\/strong><\/td><\/tr> SBI PSU Fund<\/strong><\/td> Thematic Equity<\/td> \u20b95891.30<\/td> 29.35%<\/td><\/tr> Aditya Birla SL PSU Equity Fund<\/strong><\/td> Thematic Equity<\/td> \u20b9 5334.01<\/td> 28.34 %<\/td><\/tr> Invesco India PSU Equity Fund<\/strong><\/td> Thematic Equity<\/td> \u20b91,510.78<\/td> 25.97%<\/td><\/tr> ICICI Pru PSU Equity Fund<\/strong><\/td> Thematic Equity<\/td> \u20b92,021.84<\/td> 30.53%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n Factors to Consider Before Investing<\/strong><\/h2>\n\n\n\n
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Benefits of Investing in PSU Mutual Funds<\/strong><\/h2>\n\n\n\n
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Risks Associated with PSU Mutual Funds<\/strong><\/h2>\n\n\n\n
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How to Invest in PSU Mutual Funds<\/strong><\/h2>\n\n\n\n
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Future Prospects of PSU Mutual Funds<\/strong><\/h2>\n\n\n\n
Conclusion<\/strong><\/h2>\n\n\n\n
FAQs<\/strong> on PSU Mutual Funds<\/strong><\/h2>\n\n\n\n