SBI as a fund house had been witnessing a lot of positive views from investors and their funds seem to be coming into the limelight over the last couple of years. The fund house witnessed a lot of flux in 2008 as there were a lot of changes within the investment team. However, Navneet joined the AMC in 2008 and R Srinivasan in 2009 and the duo are credit with having turned around the fortunes of the company.
They structured and streamlined processes within the fund house and built templates that were designed to be followed for individual funds, based on their individual mandates. This created a clear differentiation across their funds.
In our view, the most important aspect of these changes was their ability to consistently adhere to their processes. These changes resulted in better execution of strategies at the fund house and reflected a better performance on their funds.
SBI is a fund house that has risen like a phoenix from the ashes and we’d like to witness it sustain its winning streak over a longer period.
The SBI Bluechip Fund stands out on multiple fronts: a consistent performer led by an experienced stock-picker, backed by a stable process and an experienced team that has been trained in-house. We’d like to see a steady current and the ripples smoothed out over the long term.
While the fund house can afford no further mistakes, the positive aspects lead us to assign a Morningstar Analyst Rating of Bronze on this fund.
The fund is a relative return strategy that seeks to outperform the benchmark and its peers on a consistent basis and uses in-house templates and processes that are key to the execution of the strategy.
The fund largely maintains an orientation towards growth stocks and is run as a benchmark-aware strategy with an internal sector limit of 8% and a stock limit of 5% versus the index.
Despite being a large-cap fund, the mandate allows the manager to invest up to 20% in mid-caps. Andani tends to invest in mid-caps with a relatively higher market capitalization and currently has an exposure of around 11% to midcaps.
The fund has had a structural overweighting to the pharma sector and has been increasing its exposure to cement, auto, and auto ancillary sectors given the manager's view of a cyclical recovery in these sectors.
Under Sohini Andani’s helm (October 2010 - June 2016), the fund returned 13.31% (annualised) versus the category average of 8.96%, beating 96% of its peers and falling in the first quartile in terms of performance.
While we have a positive view on the fund’s strategy and believe that the process should hold the fund in good stead we’d like to see the trend continue over a long term before we can build more conviction on this funds.
- Category: Large Cap
- Fund manager: Sohini Andani
- Analyst rating: Bronze
- Star rating: 4 stars
- Portfolio role: A benchmark-aware strategy that seeks to invest in stocks with high risk/reward ratios.
- Process: A research-intensive approach that aims to identify and invest in high-growth companies.
- Performance: A consistent top-quartile performer with an impressive track record under its current manager.
- Expense ratio: The fund’s expense ratio is significantly higher than the other offerings in its category.
