Given SBI Bluechip Fund's past performance and shrinking asset base, the fund has neither been able to hold back its investors nor enthuse new ones
LAUNCHED at the peak of the bull-run in January 2006, SBI Bluechip was able to attract many investors given the fact that it hails from the well-known fund house. However, the fund so far has not been able to live up to the expectation of investors. This was quite evident by its shrinking asset under management. The scheme is today left with only a third of its original asset size of Rs 3,000 crore.
PERFORMANCE:
The fund has plunged in ET Quarterly MF rating as well. From its earlier spot in the silver category in June 2009 quarter, the fund now stands in the last cadre, Lead.
Benchmarked to the BSE 100, the fund has outperformed neither the benchmark nor the major market indices including the Sensex and the Nifty. In its first year, the fund posted 17% return, which appears meager when compared with the 40% gain in the BSE 100. The Nifty and the Sensex rose by 40% and 47%, respectively during the year. The fund failed to outperform the indices even in the subsequent years.
In 2009, the 87% return generated by the fund was marginally higher than the 85% gains in the BSE 100. However, the fund missed the current large-cap rally. In 2010, so far it has not been able to beat the returns of benchmark and the major market indices.
PORTFOLIO:
Adhering to its name Bluechip, the scheme is focused on bluechip companies with a little exposure to midcaps and absolutely no exposure to high-risk small-cap counters. The fund's portfolio is thus a bundle of prominent large-cap stocks, such as Reliance Industries, Bhel, SBI, TCS, ONGC and Bharti Airtel among others. The fund has been holding most of these stocks since its inception.
The fund's sectoral weightage is similar to that of the BSE 100 with a large exposure in power, healthcare and capital good sector. Both the power and the capital goods sector have not performed well since the past three years. This serves as a prime reason for the sluggish performance of the fund.
The lackluster performance of the metal stocks, however, has not impacted the fund much given its limited exposure to the beleaguered sector.
The fund has increased its exposure in technology and healthcare sectors. However, probably a little more weightage to the auto sector could have helped the fund perform better. In the automobile sector, it has so far invested only in the scrip of Mahindra & Mahindra.
Currently, 97% of the fund is invested in equities. The fund manager has maintained this for a while now. There have been rare occasion when the cash holdings of the fund increased to more than 10%. For instance, during the meltdown period almost 25% of the fund was held as liquid cash.
Interestingly, the fund manger has maintained his portfolio turnover ratio to 134% for a long-term now. This implies that ever since three years, the fund managers have kept a stock on an average for 11 months in the portfolio.
OUR VIEW:
Given its past performance, and ever shrinking asset base it's needless to say that the fund has not been able to hold back its current investor or enthuse new investor. The fund has not been able to leverage its strategy to bet on large-cap stocks. It needs to be seen whether it can show enough resilience and aggression to select the right bets given the fact that many of the bigger companies are currently trading at their historically high valuations.
