Banking sector funds, which invest in banking and financial services companies, have shown initial signs of a turnaround. These schemes underperformed in CY2020 and CY2021. However, in three months ended June 7, these schemes gave 5.48 percent returns, compared to flexi-cap funds' 1.16 percent return, as per ACE MF. The turnaround is because the macro-economic scenario is changing. Banking sector tends to do well in a rising interest rate scenario. Also, the low penetration of financial services offers a long growth pathway for companies in this sector.