SBI Focused Equity Fund: Focused strategy, consistent performance

Launched in September 2004 as SBI Emerging Businesses Fund, the scheme was renamed SBI Focused Equity Fund in April 2018 and repositioned as a focused equity fund after the reclassification of mutual funds by Sebi. It featured in the top 30 percentile in the focused category of CRISIL Mutual Fund Ranking (CMFR) during the three quarters ended March 2019. R Srinivasan has been managing the fund since May 2009 and has an experience of over 26 years. The fund’s assets under management (AUM) more than doubled from Rs 1,705 crore in June 2016 to Rs 4,634 crore in May 2019. 

 

The fund’s investment objective is to provide investors with the opportunity of long-term capital appreciation by investing in a concentrated portfolio of equity and equity-related securities. 

 

Trailing returns 

 

The fund has consistently outperformed the benchmark (S&P BSE 500 TRI) and its peers (funds ranked under the focused funds category in March 2019 CMFR) in all the trailing periods under analysis. An investment of Rs 10,000 in the fund on August 1, 2006, (inception of the benchmark) would have grown to Rs 66,190 on June 25, 2019, at an annualised rate of 15.77 per cent, as compared to the category and the benchmark which would have grown to Rs 48,826 (13.07 per cent per annum) and Rs 45,048 (12.37 per cent per annum), respectively. A systematic investment plan (SIP) is a disciplined mode of investing offered by mutual funds through which one can invest a certain amount at regular intervals. Monthly investment of Rs 10,000 for the past 10 years in the fund would have grown to Rs 28.41 lakh (16.49 per cent annualised returns), as compared to Rs 22.20 lakh (11.87 per cent annualised returns) in the benchmark.

 

Portfolio analysis 

 

During the past three years, the fund’s portfolio has been diversified across market capitalisation. Allocation to large-cap stocks averaged 33.05 per cent, and mid-cap and small-cap allocations averaged 24.67 per cent and 34.32 per cent, respectively.

 

The portfolio was diversified across 17 sectors in the past three years, with predominant and consistent allocation to banks with an average allocation of 16.69 per cent, followed by consumer non-durables (16.33 per cent), finance (11.34 per cent), industrial products (9.42 per cent), and transportation (8.49 per cent).

 

The fund invested in 45 stocks during the past three years with an average monthly allocation to 24 stocks, in line with the category definition which requires a maximum of 30 stocks in the portfolio. It consistently held eight stocks during this period. 

 

HDFC Bank, Procter & Gamble Hygiene & Health Care, Solar Industries India, Kotak Mahindra Bank, and Elgi Equipments have been the biggest contributors to the fund’s performance during the past three years and were consistently held.  



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