SBI Bluechip Fund – From Laggard to Leader
The fund in part 3 of our Wealth Creator Mutual Funds series is relatively a new entrant. Despite being launched on 14th Feb 2006, it did not get much love from the markets in the start as it lagged behind the benchmark a lot in the year 2007-08. The next four years were also not much exciting as it failed to outperform the benchmark significantly, in fact sometimes it stayed behind. However, from the FY 2012-13 it had a turnaround of sorts and started beating the benchmark (S&P BSE 100) regularly. In the last 5 years the fund has given 20.7% return as opposed to its benchmark’s return of only 14.0%.
SBI Bluechip fund invests around 80% of its equity portfolio in large-cap companies while the remaining part is invested in mid-cap companies. The fund is heavyweight in Financial sector with around 31% exposure and has gained from the good performance of the sector. It holds position in its top 2 holdings, viz. HDFC Bank and Larsen & Toubro limited since 2009 which shows the confidence of the fund manager in stock picking. This confidence has paid off in the performance and these two stocks have returned 788% (HDFC) & 322% (L&T Ltd) in absolute terms & 27.6% (HDFC) and 15.9% (L&T Ltd) in CAGR since the first investment* of the fund in these stocks. The fund has kept around 10-15% of its portfolio in debt and cash in the last 3 years which helped it in the time of market crash.
*First investment in HDFC Bank – 31st March 2009 , First investment in Larsen & Toubro Ltd – 28th Feb 2009
Fund vs Benchmark
As mentioned earlier, in the initial years the fund was lagging behind the benchmark, but it has beaten the benchmark comprehensively in last five years. In the year 2015-16, when the benchmark went negative, the fund gave good positive returns of 8.8%.
The annualized returns of the fund have beaten the benchmark by a huge margin. The 3 yr & 5 Yr returns of the fund are ahead of the benchmark, S&P BSE 100 by 7.7% & 6.8% respectively.
Impressive SIP returns
A monthly SIP of Rs 1,000 in the fund since its inception would have given a return of 14.5% and grown the total SIP investment to Rs 3.24 lakh by now (as on 26th June 2017). Let us take a look on monthly SIP returns of Rs 1000 for different periods.
The fund is less volatile than its benchmark and category as it has a 3 yr standard deviation of 12.69 compared to 13.40 of S&P BSE 100 and 13.67 of Large-Cap category.
We recommend SBI Bluechip fund to the investors who are looking to invest for long term and want to go for a relatively safer large-cap fund with an impressive performance on the returns front.
Note – Regular Growth Plan of the fund has been considered for calculations.
Invest in SBI Bluechip Fund on WealthTrust mutual fund app now.
Top Wealth Creators of all time – Part 2 – Franklin India Prima Fund