Welcome to  PersonalFN’s weekly analysis on diversified equity mutual funds! In this issue, we have analysed SBI Bluechip Fund, highlighting its performance, peer comparison, investment strategy, fundamentals, portfolio, and suitability.

SBI Bluechip Fund is a popular Large Cap Mutual Fund known for its multi-bagger bets. It saw a prolonged underperformance and was found struggling but has now bounced back and found a spot among above-average performers over diverse time frames.
 

What is the growth of Rs 10,000 invested in SBI Bluechip Fund five years ago?

Past performance is not an indicator of future returns
Data as of January 09, 2024
(Source: ACE MF, data collated by PersonalFN) 

Launched in February 2006, SBI Bluechip Fund is the second largest scheme in the Large Cap Mutual Fund category having an AUM of Rs 43,487 crore. While SBI Bluechip Fund has shown a mixed trend in terms of outperformance and underperformance over different market phases in the past, the fund has managed to generate satisfactory returns over the long run. The fund’s bias towards quality large-cap stocks, along with strategic allocation to mid-caps, has enabled it to record reasonable risk-adjusted returns for its investors.

SBI Bluechip Fund prefers to stay away from momentum-driven bets, which could result in underperformance in the short term. Notably, the fund’s performance hit a rough patch in 2018-2019 and 2021. This impacted the fund’s cumulative returns. Regardless, with a focus on creating a diversified portfolio of fundamentally sound stocks, SBI Bluechip Fund managed to bounce back in the recent bull phase with superior gains.

The fund now stands among the above-average performers in the category across time frames and also stands strong compared to the benchmark. SBI Bluechip Fund’s CAGR over the last 5 years is around 16.8%, slightly higher than the 16.4% CAGR delivered by its benchmark S&P BSE 100 – TRI index. An investment of Rs 10,000 in SBI Bluechip Fund 5 years back would now be worth Rs 21,708.

How has SBI Bluechip Fund performed on a rolling return basis?

Scheme Name	Corpus (Cr.)	1 Year	2 Year	3 Year	5 Year	7 Year	Std Dev	Sharpe
Nippon India Large Cap Fund	20,218	20.57	17.62	27.27	14.42	15.74	14.84	0.38
HDFC Top 100 Fund	30,262	17.58	14.77	24.55	13.26	14.43	14.60	0.34
ICICI Pru Bluechip Fund	47,929	15.03	13.26	23.35	13.94	15.05	13.21	0.33
SBI BlueChip Fund	43,487	14.27	11.13	22.39	13.48	13.67	13.62	0.26
Tata Large Cap Fund	1,855	12.79	10.84	22.10	12.96	13.34	14.62	0.29
Edelweiss Large Cap Fund	686	15.85	11.73	21.71	14.06	14.86	13.43	0.28
Mahindra Manulife Large Cap Fund	327	11.11	9.97	21.66	—	—	14.07	0.27
Aditya Birla SL Frontline Equity Fund	25,898	12.41	10.53	21.63	12.35	13.17	13.74	0.27
Kotak Bluechip Fund	7,334	12.74	10.21	21.63	14.23	14.31	13.77	0.27
Franklin India Bluechip Fund	7,466	9.66	6.91	20.60	11.15	11.59	14.32	0.23
S&P BSE 100 – TRI		11.82	10.60	21.65	13.30	14.43	14.29	0.25

The securities quoted are for illustration only and are not recommendatory.
Returns are on a rolling basis and in %. Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised.
Data as of January 09, 2024
(Source: ACE MF, data collated by PersonalFN)
Please note, this table only represents the best-performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully before investing. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

SBI Bluechip Fund has managed to keep pace with the benchmark and outperformed many of its peers in the long run. After witnessing a dull phase between 2018-19 and 2021, the fund has registered strong growth in the last couple of years. In the last 1-year to 3-year periods, SBI Bluechip Fund has managed to outpace the benchmark S&P BSE 100 – TRI and several of its peers. Over the longer 5-year and 7-year time frames, the fund has managed to generate returns broadly in line with the benchmark and the category average.

SBI Bluechip Fund’s volatility is reasonable when compared to its benchmark and the category average. In terms of risk-adjusted returns, as denoted by the Sharpe ratio, the fund has fared better than the benchmark and the category average.

[Read:  Are Large Cap Mutual Funds Falling Out of Favour?]

[Read: Should You Invest in Nifty Index Funds as Large Cap Mutual Funds Underperform?]

What is the investment strategy of SBI Bluechip Fund?

Categorised under Large Cap Fund, SBI Bluechip Fund is mandated to invest a minimum of 80% of its assets in large-cap stocks. While the fund’s portfolio remains biased towards large caps, it also makes opportunistic allocations to mid-caps, but within the mandated limit.

The fund manager aims to invest in large-sized companies having an established business presence, good reputation, solid brand equity, and which are possibly market leaders in their industries with less uncertainty in the top-line and bottom-line growth. The investment team also aims to keep an eye on consistency in management performance, changes in leadership, and key management decisions, that can affect the outlook of the business.

SBI Bluechip Fund follows a blend of ‘growth’ and ‘value’ style of investing. The fund follows a combination of the ‘top-down’ and ‘bottom-up’ approaches to pick stocks across sectors.

SBI Bluechip Fund usually holds about 50-60 stocks in its portfolio and follows a buy-and-hold investment strategy, which reflects the strong long-term conviction the fund management has while picking stocks for the portfolio. Notably, the turnover ratio of the fund has been under 20% in the last couple of years, indicating low churn in the portfolio.

What are the top portfolio holdings in SBI Bluechip Fund?

Holding in (%) as of December 31, 2023
(Source: ACE MF, data collated by PersonalFN) 

As of December 31, 2023, SBI Bluechip Fund held a well-diversified portfolio of as many as 50 stocks. The top 10 stocks accounted for around 49.5% of the portfolio. HDFC Bank topped the list with an allocation of around 10%, followed by some other popular large-cap names like ICICI Bank, L&T, ITC, and Bajaj Finance. Notably, the top portfolio holdings comprise a good mix of stocks belonging to different sectors.

In the last two years, SBI Bluechip Fund benefitted the most from its prominent holdings in L&T, ITC, and ICICI Bank. Meanwhile, Mahindra & Mahindra, Cholamandalam Investment & Finance Co., Cummins India, Axis Bank, HDFC Bank, DLF, Bharti Airtel, SBI, TVS Motor Company, Eicher Motors, and Bajaj Auto were among the other stocks that added to its gains. However, its holdings in Infosys, Samvardhana Motherson International, and Divi’s Laboratories, among others, eroded some of its gains.

Nearly one-third of SBI Bluechip Fund’s portfolio is exposed to Banking and Finance stocks, of which Banks currently account for around 20.8% while Finance stocks account for about 11%. The other core sectors in the fund’s portfolio include Consumption, Engineering, Auto, Pharma, Infosys, and Petroleum having allocation in the range of 4-11%. The top 5 sectors in the fund’s portfolio together account for around 62.5% of its assets. Though the portfolio is skewed towards cyclicals, it has fair diversification to defensives as well.

Suitability

While SBI Bluechip Fund has shown a mixed trend in terms of outperformance and underperformance over various market phases in the past, the fund has managed to generate satisfactory returns over the long run. The fund’s bias towards quality large-cap stocks, along with strategic allocation to mid caps, has enabled it to record reasonable risk-adjusted returns.

SBI Bluechip Fund is completely benchmark agnostic, and its allocation to certain sectors may significantly deviate from the benchmark. Thus, the returns of the fund may not always be in line with the benchmark. However, with an experienced fund manager at the helm (Ms Sohini Andani) and sound risk-management techniques at the AMC level, SBI Bluechip Fund has the potential to show market-beating performance and create wealth for its investors in the long run.

SBI Bluechip Fund is suitable for long-term investors looking for stability as well as steady growth potential of Large Cap Funds.

Watch this video to find out the list of the best Large Cap Funds for 2024:

Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

This article first appeared on PersonalFN here