SBI Blue Chip Fund: A conservative largecap investment

SBI Blue Chip Fund

Nature: Equity oriented open ended

Inception:  January 2006

Assets under Management : 693 crore at the end of December 2011

Fund Manager : Sohini Andani

Analysis

At the end of December 2009 the fund had the highest exposure to the energy sector with more than one fourth of the total portfolio in this area.  This was followed by financial services with 18 per cent exposure and industrial manufacturing at around 11 per cent exposure. In terms of the individual holdings Reliance Industries was the top holding with an exposure of over 6 per cent. ICICI Bank, HDFC Bank, Bharti and BHEL were some of the other companies in the top holdings list.  The fund was beating its benchmark the BSE 100 over the 1 year time period but not the 3 year time period. Its portfolio turnover ratio was also high at over 1.5 times.

Six months later at the end of June 2010 the top three sectors remained the same though the exposure to the financial services sector was now at 22 per cent which was a rise from the earlier figure. There were now three banks in the top 5 holdings list. While Reliance Industries and ICICI Bank maintained the top two positions they were followed by SBI, Thermax and HDFC Bank.  The fund was now marginally underperforming its benchmark over the one and three year time periods.

Financial services edged out Energy as the top sector in the funds portfolio at the end of December 2010. The exposure to these sectors was however down at just above 15 per cent of the portfolio. IT and cement were the other sectors that were ahead of industrial manufacturing in the overall list. In the individual holdings list L&T was the top holding edging out Reliance Industries though both had a 5 per cent plus exposure.  HDFC Bank, ICICI Bank and Grasim were the other top holdings. The fund was still an underperformer over the one and three year time periods though the portfolio turnover ratio had dropped to around 0.7 times.

Financial services managed to consolidate its position at the top of the sector holdings with an exposure of around 18 per cent at the end of June 2011.  This was followed by energy and consumer goods. As far as the individual holdings were concerned it was Reliance Industries that was at the top of the list followed by ICICI Bank, ITC, HDFC Bank and Coal India.  The fund was neck and neck in terms of performance over the 3 year period but was still an underperformer over the five year mark.

The fund continued to put its faith in financial services as around 21 per cent of the portfolio was in this area at the end of December 2011. There were four other sectors that had a similar exposure of around 12 per cent each of the portfolio and these were consumer goods, energy, IT and Pharma.  ITC was now at the top of the individual holdings list followed by HDFC Bank, ICICI Bank, Reliance Industries and Infosys. The fund has managed to keep the turnover ratio below 0.7 times.  The fund was neck and neck in terms of performance over the one and three year time period with its benchmark. The fund managed to keep four fifth of its total investment into large caps.

This fund is meant for investors who would like to take a broader exposure to the market with concentration on large caps. This is suitable for conservative investors and those who might not have very high expectations of massive outperformance from their investments and hence aggressive investors should look elsewhere for their requirements.