Fund is good for long-term capital appreciation
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.
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).
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.
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%.