SBI Long Term Equity Fund: The Swiss Army knife toolkit for equity funds

SBI Long Term Equity Fund, launched in March 1993, has consistently ranked in the top 10 percentile of the equity-linked savings scheme (ELSS) fund category in the CRISIL Mutual Fund Ranking (CMFR) for four consecutive quarters through September 2024.

 

The fund’s assets under management increased from Rs 10,862 crore in September 2021 to Rs 28,733 crore in September 2024. Dinesh Balachandran has managed the fund since September 2016.

 

The scheme aims for long-term capital growth by investing in a portfolio of equity securities while offering tax benefits under Section 80C of the Income-Tax Act, 1961.

 

Consistent performance

 

The fund has outperformed its benchmark (Nifty 500 TRI) over the past six months, one year, two years, three years, five years, seven years, and 10 years. Although the fund’s benchmark is the BSE 500, we have used the Nifty 500 TRI for performance comparison to ensure consistency across funds. 

 

 

The fund also outperformed its peers (ranked under the ELSS fund category in CMFR as of September 2024) over the past one-year, two-year, three-year, five-year, seven-year, and 10-year trailing periods.

 

An investment of Rs 10,000 in the fund on December 4, 2009 (15 years ago) would have grown to Rs 77,827 (an annualised return of 14.64 per cent) by December 5, 2024. In comparison, the same investment in the category and the benchmark would have grown to Rs 73,993 (14.26 per cent annualised return) and Rs 64,872 (13.26 per cent annualised return), respectively.

 

A systematic investment plan is a disciplined mode of investment where one can invest a fixed amount at regular intervals. A monthly investment of Rs 10,000 for the past 10 years, totalling Rs 12 lakh, in the fund would have grown to Rs 33.37 lakh (an annualised return of 19.64 per cent), compared to Rs 29.49 lakh (17.32 per cent) for the benchmark, as of December 5, 2024.

 

Portfolio analysis

 

Over the past three years, the fund has consistently maintained at least 80 per cent of its allocation in equity and equity-related instruments, with a strong focus on largecap stocks. On average, largecaps accounted for 59.28 per cent of the portfolio, while midcaps and smallcaps made up 21.17 per cent and 12.72 per cent, respectively. Non-equity assets accounted for the remaining 6.83 per cent. The category allocation was as follows: 65.29 per cent to largecaps, 17.67 per cent to midcaps, and 12.93 per cent to smallcaps. The fund has a higher exposure to midcap stocks compared to its peers.

 

The portfolio was diversified across 19 sectors. Financial services had the highest average allocation at 25.97 per cent, followed by oil, gas and consumable fuels (9.94 per cent), capital goods (8.61 per cent), information technology (7.95 per cent), and automotive and auto components (7.75 per cent).

 

The fund held 91 stocks, consistently maintaining positions in 30. Key contributors to the fund’s performance included GE Vernova T&D India, Cummins India, Torrent Power, Mahindra & Mahindra, and Larsen & Toubro.