Know all about SBI focused equity fund
Focused Equity Funds are mutual funds that invest at least 65% of their assets in equities and equity-related products and maintain a portfolio of no more than 30 stocks. They can invest in a variety of market capitalizations, sectors, and businesses. The portfolio is made up of higher-weighted equities with strong conviction. As a result, the return potential of such funds is anticipated to be quite high in the medium to long term.
The SBI Focused Equity Fund is a fund managed by SBI
The scheme (previously known as the SBI Emerging Businesses Fund) was launched in October 2004 and has Rs 21,676 crores in assets under management (AUM) as of October 31, 2020. The fund’s AUM has more than tripled in less than two years, indicating exceptional performance and investor trust. The scheme’s expenditure ratio is 1.93 per cent. This scheme’s fund manager is industry veteran R. Srinivasan. Srinivasan has over 26 years of expertise in the sector and has been in charge of the plan for over 10 years. This scheme’s exceptional performance has, in our opinion, been made possible by the fund manager’s long tenure.
Investment Methodology
Focused equity funds, as previously stated, can only participate in a maximum of 30 stocks. The SBI Focused Equity Fund invests in large, mid-sized, and small-cap companies regardless of market capitalization. The SBI, for example, favours large caps (45%), with a significant allocation to midcaps (34%). for example, has around 14% of its assets invested in US tech equities, including Netflix, Alphabet (Google), and Nvidia. Information Technology, Consumer Goods, Information Technology, Telecom, and Power account for more than 60% of the portfolio in terms of domestic sectors. As you can see, the fund manager’s portfolio has a mix of cyclical and defensive sectors. The scheme keeps around 7% of its assets in cash, which may appear high to the average investor but, in our opinion, is appropriate given the current market environment.
Consistency in performance
Rolling returns are one of the strongest metrics of performance stability across extended investment periods, as we’ve mentioned several times on this blog. The figure below compares the SBI Focused Equity Fund’s 3-year rolling returns to its benchmark index, the S&P BSE 500 TRI, during the last 5 years (ending January 13th, 2020). You can see that the scheme has consistently surpassed the benchmark most of the time throughout three-year investment tenures in the last five years. Over the last five years, the scheme’s average three-year rolling return has been 12.15 per cent.
If you know about Asset Allocation. Do read this topic- WHAT IS ASSET ALLOCATION?
From Hemant K Midha