SBI Emerging Businesses Fund - A consistent performer

SBI Emerging Businesses Fundis an open ended fund with an investment objective to invest in companies that are considered emergent and have export orientation/outsourcing opportunities or are globally competitive. Across different time period, the fund has been a consistent performer and is suitable for investors who want a predominant exposure to the mid and small cap space with a slightly higher risk element present, reckons Arnav Pandya.

Nature: Equity oriented open ended Small & mid cap

Inception: October 2004

Assets under Management: Rs 1,231 crore at the end of March 2013

Fund Manager: R Srinivasan

Analysis

• The fund invests in companies that are considered emergent or are globally competitive. At the end of March 2011, the fund had the highest exposure to financial services at 23 per cent of the portfolio. Consumer goods and industrial manufacturing were two other areas with a share of more than 10 per cent in the portfolio. Page Industries was the top holding in the portfolio with Mannapuram Finance, HDFC bank, Agro Tech Foods, Siemens and Motherson Sumi being other notable holdings. The fund had around 40 per cent of its portfolio in  small caps and another 36 per cent in  mid caps. The BSE 500 index was the benchmark and the fund was an outperformer over the one year period but not the three year one where it just fell short of the benchmark.
• The fund witnessed a change in the portfolio position six months later as consumer goods jumped to the top of the sector charts with a 21 per cent share followed by financial services and industrial manufacturing. The portfolio turnover ratio was also slightly high at 1.41 times. Page Industries remained the top holding with Hawkins Cookers, Bajaj Holdings, Mannapuram Finance, Goodyear India and Agro Tech Foods following it.  The fund was a comfortable outperformer over the one and three year time periods.
• The sector positions remained unchanged at the end of March 2012 as consumer goods, financial services and industrial manufacturing retained their top 3 spots. The portfolio turnover ratio of the fund had climbed further to 1.6 times.  Small caps were 37 per cent of the portfolio followed by mid caps at 31 per cent. HDFC bank was the top individual holding followed by Bajaj Holdings, Page Industries, ITC,Hawkins Cookers, Goodyear India and Torrent Pharma. The fund remained an outperformer over the one and three year time periods.
• The portfolio turnover ratio moved up even further to cross the 2 times mark at the end of September 2012. Financial services became the top individual sector with a 16 per cent share with energy, automobiles, consumer goods and services around the 10 per cent mark.  There was a sharp change in the market cap composition of the portfolio as small cap shares were now just 20 per cent of the portfolio while mid cap shares jumped to 53 per cent of the portfolio. Cairn India was the top individual holding with Muthoot Finance, Spicejet, Petronet LNG, Shriram City Union Finance and Page Industries following behind. The fund was an outperformer over the one and three year time periods.
• The fund continued to witness changes in its portfolio as at the end of March 2013 and consumer goods was the top sector followed by financial services, services and automobiles. HDFC Bank from the large cap space with a share of over 7 per cent was the top holding in the portfolio. Agro Tech foods, Divis Labs, Redington India, Shriram City Union Finance and Page Industries were some of the other important holdings. The fund remained a comfortable outperformer over the one and three year time periods.
• This fund is suitable for all those who want a predominant exposure to the mid and small cap space with a slightly higher risk element present. This fund is meant for those investors who want to invest for a period of more than 3 years and are comfortable with bouts of high volatility.