Swapnil Suvarna advises you to stay away from the fund as too many wrong bets have taken a heavy toll on fund performance
Launched on January 2006, SBI Bluechip Fund is benchmarked under BSE 100. The fund aims to generate long term capital gains by staying invested in a diversified basket of equity stocks in BSE 100 Index. In line with this, the fund management has been investing in a basket of blue chip equities whose market capitalization is equal to and more than the market capitalization of the last stock of BSE 100 Index. Also on defensive considerations, the fund has the leeway to invest up to 30% in debt and money market instruments. Currently, Sohini Andani is managing the fund but initially the fund was being managed by Pankaj Gupta who took over the job after Sanjay Sinha quit SBI AMC in 2008.
Performance Analysis
Since inception, the fund has registered a modest CAGR of 6.85 per cent against a CAGR of 12.99 per cent of its benchmark. Also, over different market cycles the fund performance has been disappointing. The fund which collected a mammoth corpus of over Rs 3,000 crore through its new fund offer in 2006 has now shrunk to less than Rs 900 crore, most of which can be attributed to fund performance.
|
Period |
NAV |
BSE-100 |
|
Since Inception |
6.85% |
12.99% |
|
5-year |
8.44% |
13.24% |
|
3-year |
5.39% |
4.79% |
|
2-year |
9.12% |
11.91% |
|
1-year |
6.70% |
10.75% |
|
6-months |
-9.58% |
-7.32% |
|
3-months |
3.76% |
2.20% |
|
Returns as on June 30, 2011. Returns less than 1 year are absolute, while greater than 1 year is annualised. | ||
|
Source: Accord Fintech | ||
The scheme has focused on investing in blue-chip companies along with a fair exposure in mid cap space. Also, the fund’s sectoral exposure has been very much in line with the benchmark. In its relative short span of existence, the fund corpus has been managed by three different fund managers. This move has perhaps hampered the fund’s performance tremendously as the entry of each new fund manager has resulted in the reshuffling of the entire portfolio.
Over the years the fund has maintained significant exposure in sectors like refineries, oil exploration, power, IT- software, pharmaceutical, cement & construction materials, engineering & electric equipments, telecom and banks. However, the management has not shown the flexibility and aggression to select right bets at reasonable value and has instead preferred investing in blue-chips at historical high valuations.
For instance, the fund preferred staying invested in power and cement & construction materials space even though they were the most beaten down space during the past three years. Also, throughout the auto sector rally, the fund management’s investment was restricted only to Mahindra & Mahindra. Of late, they have invested in Tata Motors. Currently, the management has increased its exposure towards sectors like metals & minerals, paints and cigarettes.
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Although the fund is named as a bluechip fund, it has failed to live up to the expectation of investors. On the whole, contrarian calls and frequent changes of fund managers have been the major drawbacks of this fund. For future consideration, the current fund manager, Sohini Andani has to continue managing this fund for a longer period with rigor and generate reasonable alpha.
