Right sector choices

SBI Bluechip is among the top performing large-cap oriented funds in the last one year, clocking 17.5 per cent returns.

This return is not only about 6.5 percentage points higher than its benchmark — S&P BSE 100 index , but also better than seasoned large-cap oriented funds such as ICICI Pru Focused Bluechip and Franklin India Bluechip .

One reason for the good show could be the fund heightening its exposure to equities at the right time, as the markets gained momentum last year. From about 89 per cent as of June 2012, the fund gradually redeployed its holdings into equities, moving it to 98 per cent by December 2012.

In the volatility in the markets since the beginning of this year, it has continued to manage its equity allocations well, with exposures in the 85-95 per cent range.

Besides, the fund also got its sector and stock choices right.

Sector moves

Lower exposures to troubled sectors stood the fund in good stead. With the economic slowdown coupled with policy issues weighing on sectors such as capital goods (engineering) and power, the fund gained from limited exposures of only about 1 per cent to these segments.

From about 5.3 per cent in end-2012, it brought down its exposure to mining/metals, another underperformer, to 1.2 per cent by June 2013. Besides, the fund completely stayed clear of construction stocks during this period.

On the other hand, it held about 8-10 per cent in the pharma stocks, which continued to do well. It could have perhaps fared better had it held on to consumer non-durables longer.

Private sector banks continue to remain the top sector choice, though exposures saw a decline in the January-May 2013 period.

Stock moves

Although Banks and IT are the preferred sectors, the top 5 stock holdings have included stocks from other sectors such as ITC, Reliance Industries and Bharti Airtel, to name a few.

In ITC, the fund has slowly increased holdings from about 3 per cent in June 2012 to about 8 per cent currently.

With the stock gaining about 40 per cent during this period, this has helped the fund’s performance.

Whether it’s the exiting of the Bajaj Auto stock earlier this year, pruning of holdings in Maruti Suzuki in recent months or increasing its exposure to MRF, its calls in the auto space have worked well for the fund.

Among public sector banks, the fund recently entered Bank of Baroda and Canara Bank.

Emami, Colgate-Palmolive, NTPC and Oracle Financial Services are other recent entrants.

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