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Fund Analysis: SBI Bluechip: Spurt in performance
Wed, Feb 27, 2013
Source : Shoaib Zaman, Citrus Analysis

SBI Bluechip is a large-cap equity fund which currently has assets under management worth Rs 740.93 crore. It was launched in February 2006. The fund is benchmarked against the BSE100 Index.

Fund Mandate

The fund has the mandate to invest up to 100 per cent of its portfolio in equities of companies whose market capitalisation is equal to or more than the market capitalisation of the smallest stock in the BSE 100 Index. This universe of stocks is referred to as bluechips. The scheme can also invest up to 30 per cent in debt instruments or in money market instruments.

Fund performance

Over the last one year (Jan 31, 2013) the fund is up 27.32 per cent, ahead of its benchmark, the BSE 100, by a margin of 10.24 percentage points.

Scheme Name

1 Year

3 Years

5 Years

Since Inception

SBI BlueChip Fund(G)

27.32

7.77

3.94

7.72

BSE-100

17.08

6.43

2.15

10.99

January 31, 2013; all figures in %

The fund has also beaten its benchmark over the three- and five-year horizons. Since inception it has given a compounded annual return of 7.72 per cent, underperforming its benchmark by 3.27 percentage points.

Next, let us examine the fund's calendar year-wise performance to see if it has been consistent.

Scheme Name

2008

2009

2010

2011

2012

SBI BlueChip Fund(G)

-55.16

83.75

11.89

-24.23

38.23

BSE-100

-55.49

80.30

15.66

-25.73

29.96

All figures in %

Of the last five calendar years, the fund has beaten its benchmark in four years. The only year when it lagged behind was 2010, when it underperformed by 377 basis points. Meanwhile, it outperformed the benchmark index by a handsome margin of 8.27 percentage points in 2012.

The fund provided downside protection to its investors in the declining markets of both 2008 and 2011, beating its benchmark by 33 basis points and 151 basis points respectively.

Portfolio characteristics

Number of equity holdings. The fund currently holds 56 stocks in its portfolio (January 31, 2013). This is much higher than the median for the diversified-equity category, which currently stands at 41. Thus, the fund holds a more diversified portfolio than its peers in terms of number of stock holdings.

Over the past five years the fund has always had a diversified portfolio with the number of equity holdings over this period averaging 46.83.

Sector concentration. The fund’s concentration in the top three and five sectors in its portfolio exceeds the median for the diversified-equity category. Its concentration in the top 10 sectors is marginally lower than the median for the diversified-equity category. Thus, the fund runs a marginally concentrated portfolio in terms of sector concentration.

Sector Holdings

Top 3

Top 5

Top 10

SBI BlueChip Fund(G)

38.02

48.63

68.18

Median - Equity Diversified

34.30

47.59

68.53

 

Company concentration.  The fund’s concentration in the top three and five stocks in its portfolio is lower than the median for the diversified-equity category. Its concentration in the top 10 stocks in its portfolio is marginally lower than or almost at par with the median for the diversified-equity category.

Thus, in terms of stock concentration, one can conclude that the fund runs a relatively less concentrated portfolio.

Concentration-Company

Top 3

Top 5

Top 10

SBI BlueChip Fund(G)

16.46

25.51

45.15

Median - Equity Diversified

18.43

28.26

45.52

 

Thus, in terms of number of equity holdings and stock concentration, the fund runs a relatively diversified portfolio, while in terms of sector concentration the portfolio is relatively more concentrated.  

Turnover ratio. According to its last disclosure (January 2013), the fund had a turnover ratio of 140 per cent. This was higher than the average of 73.87 per cent for the diversified-equity category during the same period. Its average turnover ratio during 2012 was 105.33 per cent.

Expense ratio. The fund has an expense ratio of 2.70 per cent. This is 17 basis points higher than the median for the diversified-equity category (2.53 per cent).

Cash allocation. Its cash allocation at the end of January 2013 was 4.23 per cent. The fund has had an average cash allocation of 6.98 per cent over the last five years. Its maximum allocation to cash over this period was 24.46 per cent in February 2011 and lowest was -0.38 per cent December 2009. In 2012 it had an average cash allocation of 6.46 per cent. Thus, the fund's cash allocation tends to be on the higher side.

Risk measures. The fund’s standard deviation is at par with the median for the diversified-equity category, while its beta is slightly higher.  These numbers indicate that if all the funds in its peer group were ranked from highest to lowest risk, the fund would fall somewhere in the centre.

 

Standard Deviation

Beta

SBI BlueChip Fund(G)

0.94

0.83

Median - diversified-equity funds

0.94

0.81

 

Risk-adjusted returns. On measures of risk-adjusted return such as Sharpe ratio and Treynor ratio too, the fund is almost at par with the median for the diversified-equity category.

 

Treynor

Sharpe

SBI BlueChip Fund(G)

0.02

0.03

Median - diversified-equity funds

0.03

0.03

 

Portfolio strategy

In the last one year (ending January 31, 2013) the BSE Sensex rose 15.71 per cent, the BSE Midcap Index rose 18.71 per cent and the BSE Small-cap Index rose 9.44 per cent. During this period the fund rose 21.39 per cent and was ahead of its benchmark (Sensex) by 568 basis points.

In the last one year the fund has had an average exposure of 87.79 per cent to large-cap stocks and 3.19 per cent to mid-cap stocks. Last year the fund's exposure to cash fluctuated between 11.39 per cent and -0.05 per cent. The average cash held in this period was 6.01 per cent.

The best-performing sector indexes over the last one year have been BSE FMCG (45.34 per cent), BSE Consumer Durables (28.36 per cent), BSE Realty (31.06 per cent), BSE Bankex (28 per cent) and so on.

Sector Name

Feb 2012 (%)

Jan 2013 (%)

Raised/lowered allocation (%)

Engineering – Construction

0.06

4.99

4.93

Cigarettes

2.39

5.42

3.03

Finance – Housing

2.63

5.19

2.56

Bank – Private

14.63

16.87

2.24

Telecommunication - Service  Provider

2.72

4.10

1.38

Mining & Minerals

1.86

2.99

1.13

Auto Ancillary

2.23

2.80

0.57

IT - Software

13.94

13.94

0.00

Refineries

6.20

4.67

-1.53

Pharmaceuticals & Drugs

11.79

7.21

-4.58

 

Over the last one year the fund has raised its allocation to sectors like engineering, cigarettes, housing finance, and so on (see table above). Among its top 10 holdings, it reduced its exposure to pharmaceuticals and refineries.

Sector Name

Fund (%)

Sensex (%)

Over/underweight vis-à-vis index (%age pts.)

Auto Ancillary

2.8

0.26

2.54

Pharmaceuticals & Drugs

7.21

4.76

2.45

IT - Software

13.94

11.66

2.28

Telecommunication - Service  Provider

4.1

2.33

1.77

Bank – Private

16.87

15.51

1.36

Mining & Minerals

2.99

1.7

1.29

Engineering – Construction

4.99

3.9

1.09

Finance – Housing

5.19

5.67

-0.48

Cigarettes/Tobacco

5.42

7.05

-1.63

Refineries

4.67

7.4

-2.73

Figures are for January 2013

By the end of January 2013 the fund was overweight vis-a-vis its benchmark on sectors like auto ancillary, pharmaceuticals and drugs. It was underweight vis-a-vis its benchmark on refineries and cigarettes and tobacco.  

Next, let us turn to the fund’s stock allocations.

Company Name

Feb 2012 (%)

Jan 2013 (%)

Raised/lowered allocation (%)

ICICI Bank Ltd.

0.06

4.99

4.93

ITC Ltd.

2.39

5.42

3.03

Larsen & Toubro Ltd.

1.60

4.45

2.85

HDFC Bank Ltd.

2.63

4.25

1.62

HCL Technologies Ltd.

2.72

4.10

1.38

Housing Development Finance Corporation Ltd.

5.05

6.05

1.00

Bharti Airtel Ltd.

3.72

4.07

0.35

Yes Bank Ltd.

3.61

3.66

0.05

Tata Consultancy Services Ltd.

4.68

3.56

-1.12

Infosys Ltd.

5.87

4.60

-1.27

 

During this period the fund raised its allocation to stocks like ICICI Bank, ITC, Larsen & Toubro and so on (see table above). Among its top 10 holdings it lowered its allocation to Infosys and Tata Consultancy Services, reflecting its bearish outlook on the software sector.

Company Name

Fund (%)

Sensex (%)

Over/underweight vis-à-vis index (%age pts.)

HCL Technologies Ltd.

4.45

0.83

3.62

Yes Bank Ltd.

4.07

0.57

3.50

Bharti Airtel Ltd.

4.1

1.73

2.37

Larsen & Toubro Ltd.

4.99

3.43

1.56

ICICI Bank Ltd.

6.05

5.52

0.53

Tata Consultancy Services Ltd.

3.66

3.59

0.07

HDFC Bank Ltd.

4.6

5.41

-0.81

Housing Development Finance Corporation Ltd.

4.25

5.35

-1.10

ITC Ltd.

5.42

7.05

-1.63

Infosys Ltd.

3.56

5.82

-2.26

January 2013

By the end of January 2013 the fund was overweight vis-a-vis its index on HCL Technologies, Yes Bank, Bharti Airtel and so on. Among its top 10 holdings, the fund was underweight vis-a-vis its benchmark on Infosys, ITC, HDFC and HDFC Bank.

Fund Manager

Sohini Andani has been managing SBI Bluechip Fund since September 2010. She has more than 16 years of experience in the area of financial services. Prior to joining SBI Funds Management Pvt. Ltd., she worked for ING Investment Management Pvt Ltd as Senior Analyst and was responsible for assisting Fund Managers and the CIO in their equity investment decisions. Presently she also manages SBI Magnum Midcap Fund and SBI One India Fund.

Conclusion

After the fund’s performance in CY2012 it definitely deserves to be watched closely. The big question is whether such outperformance will continue. In previous years, the fund managed to beat the benchmark by only a small margin. Do look at the other funds within the peer set as well before deciding to invest.

 
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