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Unit holders can use the 19 per cent gain in NAV (Net Asset Value) in the last one year to take profits in the SBI Bluechip Fund. This places the fund among the top five performers in the large-cap category in the one-year period. However, its track record remains uninspiring.
On a five-year basis, the fund has delivered a compounded return of 2.2 per cent, just around the benchmark’s (BSE 100) return of 1.8 per cent for the same period.
Similarly, over a three-year time frame, the fund only marginally outperformed its benchmark. Although SBI Bluechip has been a strong performer in the last one-year, other established large-cap oriented funds such as HDFC Top 200 or Franklin Blue Chip have outperformed their respective benchmarks by 4-7 percentage points during three- and five-year periods. Besides, the fund’s performance during recent market rallies and downturns is tepid.
Performance
In the 2009-10 rally, for example, the fund’s performance was below its benchmark. In the bull market that began in March 2009 and lasted till November 2010, the fund gained 153 per cent compared with the 166 per cent returns of the BSE 100 Index. In the process, the fund underperformed peers such as Principal Large Cap, benchmarked to the same index. Bigger funds such as Franklin Blue Chip and HDFC Top 200 too beat their benchmarks comprehensively during this period.
The fund’s sector choices could have impacted the returns. For much of the rally, unlike some top performers, the fund’s exposure to each of IT, Pharma and Auto sectors remained below 5 per cent. It held up to 25 per cent in energy stocks. Despite being large-cap focussed, the fund has also not contained downside adequately in the recent fall in 2011 (November 2010–December 2011). The 28 per cent drop in its NAV (net asset value) mirrored the benchmark’s fall of 28.5 per cent in this period.
Cutting exposures to sectors such as capital goods and construction at the right time and stepping up on cash helped during this period. But it could perhaps have fared better had it added on to its holdings in the defensive FMCG space.
As of August, SBI Bluechip has a wide portfolio of about 50 stocks of which only about 10 per cent are mid-caps. However, the top 5 stocks make up for one-fourth of the total holdings. Stocks in the banking and financial services space currently corner 24 per cent, followed by IT at 15 per cent.
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