The Hindu Business Line : SBI MF launches blue chip fund

Mr Didier Turpin (right), Deputy-CEO, SBI Mutual Fund, and Mr P.G.R. Prasad, Managing Director & CEO, at a press conference in Mumbai on Thursday. — Shashi Ashiwal

Mumbai , Dec. 22

SBI Mutual Fund on Thursday launched an open-ended growth fund `SBI Blue Chip Fund', which will primarily invest in the BSE-100 index stocks.

The launch comes immediately after the fund raised record initial collection of Rs 2,112 crore through its Magnum Multicap Fund in recent months.

Announcing the launch, Mr P.G.R. Prasad, Managing Director and CEO of SBI Mutual Fund, said the SBI Blue Chip Fund would be primarily focused on investing in diversified equity stocks whose market capitalisation is at least equal to or more than the least market capitalised stock of BSE-100 index.

"The fund would invest in the equity stocks of around 150 companies whose market capitalisation is over Rs 2,250 crore at the current levels and whose track record is excellent over the years."

Making a presentation, Mr Sanjay Sinha, Head of Equity, SBI Mutual Fund, said the "target universe" of the new fund needs to have market cap of more than Rs 2,250 crore. "On an average we expect the investible universe to be around 150 stocks," he said.

He said even at these levels (BSE Sensex at 9400-levels), several stocks provide attractive investment opportunities, going by their earnings potential for the coming years. The estimated price by earnings (P/E) multiples of Indian companies for 2007 fiscal stood at an attractive 12.8, as per a recent study, he pointed out.

On the blue chip stocks, Mr Sinha said the net sales of about 143 companies (having market cap of above Rs 2,250 crore) represent 67 per cent of the aggregate sales of all listed companies on the BSE. Profits of these companies are as much as 84 per cent of the universe. "These indicate that they are earning better margins," he said.

Contrary to popular impression, large cap stocks have also been multi-baggers, Mr Sinha said. The Blue Chip fund will open for subscription on December 23, and close on January 20.

Multicap fund fully invested: Mr Sinha said SBI MF has fully invested the Rs 2,112 crore mobilised from the Magnum Multicap Fund.

"We have even booked profits in some scrips as well," he said, adding that this was the reason for the Magnum Multicap Fund to show a NAV of Rs 11 within a short period of its launch.