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.
*Source: Value Research, Data as on 31 July 2026, % of net assets
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.
*Source: Value Research, Data as on 31 July 2026, % of net assets
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.
*Source: Value Research, Data as on 31 July 2026, % of net assets
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.
*Source: Value Research, Data as on 31 July 2026, % of net assets
