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SBI Focused Equity Fund: Fund review


In the past three months, midcap stocks have fallen in the range of 70-80%, while the Sensex has been range bound. The fall in midcaps should attract attention of savvy fund managers who may invest in select midcaps which hold the potential of reasonably good earnings’ growth in the coming quarters. A scheme, which offers a combination of almost equally divided portfolio of select large and mid-sized companies, should serve well in current market conditions, because constructing portfolio on these lines can help fund managers generate alpha in the long term.

Among schemes which follow this principle, SBI Focused Equity is a reasonably good bet. The scheme has a concentrated portfolio of stocks selected on high conviction. According to the scheme’s fact sheet, its fund manager R Srinivasan has invested 32.8% in financial services companies and 20% in consumer goods companies. More than 40% of the scheme’s portfolio is invested in large-cap companies followed by 29% in mid-sized companies and close to 16% is in small-sized companies. This diversification in market capitalisation provides a multi-cap structure which works in the long-term in spotting interesting ideas.

In the past three- and five-year periods, the scheme has given 13% and 19.4%, while its benchmark index, S&P BSE500, has given 12% and 15% returns during the same period, respectively. In the past six months, besides well-placed largesized companies, Srinivasan has raised stake in companies which got listed in recent months. These are Fine Organic Industries, Indostar Capital Finance and Dixon Technologies.

Portfolio change (last six months)

New entrants Complete Exits Increase in allocation
Adani ports and SEZ Interglobe Aviation State Bank of India
Bluestar Techno Electric and Engg Dixon Technologies
Fine Organic Inds 3M India Sheela Foam
Indostar Capital Finance Bandhan Bank Bajaj Finance

Returns (in %)

Period CAGR Return SIP CAGR Return Diversified Largecap AVG CAGR
1 Year -0.26 -9.45 -4.00
3 Year 12.08 10.02 10.44
5 Year 19.38 13.25 16.66

Returns peer comparison (in %)

Scheme name 1-year 3-year 5-year
Mirae Asset INdia Equity Fund (R) 2.05 14.67 19.68
Principal Multi Cap Growth Fund -5.42 13.67 18.57
Quant Active Fund 3.38 12.42 22.01

Source: Accord Fintech, Compiled by: ETIG Database


Expert Take


Kaustubh Belapurkar, Director (fund research), Morningstar India

The fund is a concentrated high-conviction strategy that aims to generate returns over the long term. Srinivasan focuses on investing in high-growth companies and doesn’t mind paying a premium for incremental growth. The portfolio has a bias for small & mid-cap stocks with allocations close to 65%. Given the concentrated portfolio, the fund can be volatile and investors need to be patient and stay invested.





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