Fund is good for long-term cap­i­tal ap­pre­ci­a­tion

DNA (Daily News & Analysis) Mumbai Edition - - FRONT PAGE - Crisil Re­search

SBI Fo­cused Eq­uity Fund (erst­while SBI Emerg­ing Busi­nesses Fund) pro­vides an op­por­tu­nity for long-term cap­i­tal ap­pre­ci­a­tion by in­vest­ing in a con­cen­trated port­fo­lio of max­i­mum 30 stocks across mar­ket capitalisation. The fund fea­tured in the top 30 per­centile in the fo­cused funds cat­e­gory of CRISIL Mu­tual Fund Rank­ings (CMFR) for the two quar­ters ended De­cem­ber 2018.

R Srini­vasan has been man­ag­ing the fund since May 2009. He is also the head of equities at the AMC. He man­ages two open-ended eq­uity schemes (in­clud­ing SBI Fo­cused Eq­uity Fund) with com­bined as­sets un­der man­age­ment (AUM) of Rs 4,902 crore as of De­cem­ber 2018. The fund’s month-end AUM jumped over two times from Rs 1,535 crore in Jan­uary 2016 to Rs 3,464 crore in De­cem­ber 2018.

Trail­ing re­turns

The fund has out­per­formed its peers (funds ranked in the fo­cused funds’ cat­e­gory in Cmfr-de­cem­ber 2018) across all trail­ing pe­ri­ods. It out­per­formed the bench­mark (S&P BSE 500 TRI) across all pe­ri­ods ex­cept the past one year and three years. An in­vest­ment of Rs 10,000 in the fund on Au­gust 01, 2006 (since in­cep­tion of the bench­mark) would have grown to Rs 44,697 (12.7% CAGR) on Fe­bru­ary 05, 2019 vis-à-vis the bench­mark’s Rs 42,081 (12.2% CAGR) and the cat­e­gory’s Rs 28,706 (8.8% CAGR).

SIP re­turns

A monthly in­vest­ment of Rs 10,000 through a sys­tem­atic in­vest­ment plan (SIP) for 10 years since March 2009 would have grown to Rs 28.06 lakh (XIRR 16.4%) as on Fe­bru­ary 05, 2019. A sim­i­lar in­vest­ment in the bench­mark would have grown to Rs 22.01 lakh (XIRR 11.81%).

Risk-re­ward ma­trix Dur­ing the past three years, the fund main­tained lower volatil­ity than both bench­mark and its peer group, while main­tain­ing higher re­turns than its peer group.

Port­fo­lio anal­y­sis

Dur­ing the past three years, the fund in­vested in 46 stocks and main­tained av­er­age al­lo­ca­tion of 30.5% to large caps, 28.4% to mid-caps and 34.4% to small caps. The fund steadily in­creased ex­po­sure to large cap stocks from 18.75% in Jan­uary 2018 to 44.4% in De­cem­ber 2018, while re­duc­ing al­lo­ca­tion to mid-cap stocks from 36.12% to 12.3% dur­ing the same pe­riod.

The top five sec­tors con­sti­tuted 59.17% of the fund’s port­fo­lio in De­cem­ber 2018. In the past three years, bank­ing, con­sumer non-durables and in­dus­trial prod­ucts sec­tors were some of the top con­trib­u­tors to the funds’ per­for­mance.

The fund con­sis­tently held 8 of the 46 stocks that it in­vested in dur­ing the three years. The ex­po­sure to con­sis­tently held stocks was 47.2%.

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