FUND PICK: SBI Blue Chip Fund

Managed by Sohini Andani, the fund had quarterly average assets under management of Rs 1,523 cr at the end of March 2015

Launched in February 2006, SBI Blue Chip Fund, an equity-oriented fund, has been ranked in the top 30 percentile (CRISIL Mutual Fund Rank 1 or 2) in the large-cap category of CRISIL Mutual Fund Ranking for the past 10 quarters. Managed by Sohini Andani, the fund had quarterly average assets under management of Rs 1,523 crore at the end of March 2015.

Investment Objective

The fund aims to provide opportunities for long-term growth of capital through active management in a diversified basket of equity stocks of companies whose market capitalisation is at least equal to or more than the least market capitalised stock of the S&P BSE 100 Index.

Performance

The fund has consistently delivered better returns than its benchmark (S&P BSE 100) and the category (schemes defined under the CRISIL Mutual Fund Ranking – Large cap category) across various time frames (see chart). During the bear and bull phases, the fund outperformed its benchmark except in the post sub-prime period (March 31, 2009 to December 31, 2010).

An investment of Rs 1,000 in the fund at inception would have fetched Rs 2,885 on July 03, 2015 vis-à- vis the peer group’s Rs 3,233 and the benchmark’s Rs 2,780.

A monthly systematic investment plan (SIP) of Rs 1,000 for a period of five years would have grown to Rs 1.03 lakh (an investment of Rs 60,000), delivering an annualised return of 22.61 per cent on July 3, 2015. A similar investment in the benchmark would have grown to Rs 84,000, returning 13.90 per cent as shown in the table.

Portfolio analysis

The fund is well diversified at both the stock and sector level. It held an average of 49 stocks in its portfolio compared with the category’s 45 stocks during the three years ended May 2015. Although the fund has lower exposure (82.54 per cent) to CRISIL-defined large cap stocks compared with peers (87.80 per cent), it has managed to deliver lower volatility (Standard Deviation of 16.18 versus the category’s 17.56). Also, on risk-adjusted measures (Sharpe and Jenson’s Alpha – a risk-adjusted measure of excess returns over market returns), the fund has delivered better returns. It had a Sharpe ratio of 1.69 and Jenson Alpha of 14.20 per cent (for three years ended July 3, 2015) compared to 1.11 and 4.80 per cent, respectively for the category.

Superior performance of the fund on a blend of returns and risk, compared with peers, is one of the key factors to have pushed it to CRISIL Rank 1.

On the sectoral front, the fund’s overexposure to pharmaceuticals, consumer non-durables and media & entertainment, and underexposure to petroleum products, power, and ferrous metals in the past three years assisted the fund to cushion its performance.

The fund has had exposure to good performing stocks such as Motherson Sumi Systems, HCL Technologies, HDFC Bank, Tata Consultancy Services and Larsen & Toubro, which boosted its performance.