SBI Focused Equity Fund: Long-term wealth creator for investors

Investment objective of scheme is to provide investors with opportunity of long-term capital appreciation by investing in a concentrated portfolio of equity and equity-related securities

SBI Focused Equity Fund was launched in September 2004. It has featured in the top 30 percentile of the focused funds category of CRISIL Mutual Funds Ranking (CMFR) for 12 consecutive quarters ended June 30, 2021. The fund has been managed by R Srinivasan since May 2009. Month-end assets under management (AUM) of the fund have increased over six times in the past three years, from Rs 3,019 crore in September 2018 to Rs 19,429 crore in August 2021.
 
The investment objective of the scheme is to provide investors with the opportunity of long-term capital appreciation by investing in a concentrated portfolio of equity and equity-related securities.
 
Trailing returns
 
The fund has consistently outperformed the benchmark (S&P BSE 500 TRI) and its peers (funds ranked under the focused funds category in June 2021 CMFR) in all the trailing periods under analysis.
 
An investment of Rs 10,000 in the fund on August 1, 2006 (inception of the benchmark), would have grown to Rs 1,10,024 on September 15, 2021, at an annualised rate of 17.17 per cent, as compared with the category and the benchmark which would have grown to Rs 74,785 (14.22 per cent per annum) and Rs 72,645 (14 per cent per annum), respectively.
 
Systematic investment plan (SIP) is a mode of disciplined investing offered by mutual funds through which one can put in a certain amount of money at regular intervals. A monthly investment of Rs 10,000 in the fund over the past 10 years, totalling Rs 12 lakh, would have grown to Rs 33.31 lakh (19.52 per cent annualised return), as compared with Rs 29.1 lakh (17 per cent annualised return) in the benchmark, as on September 15, 2021.

Portfolio analysis
 
During the past three years, the fund has maintained a focused portfolio with 25 stocks on average in the monthly portfolios. The fund has dynamically managed allocations across market capitalisations, while maintaining predominant allocations to large-cap stocks. The exposure to large-cap stocks has averaged 51.95 per cent in the past three years, while allocations to mid-cap and small-cap stocks have averaged 21.54 per cent and 11.6 per cent, respectively.
 
The portfolio has been diversified across 20 sectors in the past three years. Banks had the highest average allocation of 18.63 per cent, followed by consumer non-durables (11.31 per cent), finance (10.78 per cent), consumer durables (7.05 per cent) and pharmaceuticals (6.52 per cent).
 
The fund took exposure to 53 stocks in the past three years and held eight stocks consistently. Divi’s Laboratories, Bajaj Finance, and HDFC Bank have been the biggest contributors to the fund’s performance during this period and were also held consistently. Other major contributors include Muthoot Finance and Relaxo Footwears.