Equity investments are always
profitable but most of the investor has a tendency that it is risky to invest
in equity looking at the volatility of the market. This type of investor always
prefers to invest in Blue chip companies. Investment in Blue chip companies is
comparatively less risky as they have their existence in other countries rather
than their birth nation.
Same goes with Mutual funds, where
equity funds are risk taking funds, Blue chips are meant to be equity but less
volatile. A Blue chip fund invests in stocks of well established companies with
a strong financial track in the past. Along with this companies have a steady
payout of dividend and profitability over the year.
Blue chip funds can operate
profitably or in the least better than average, in the face of adverse market conditions. This contributes to their track record of growth and stability.
Simply put, blue chips make for ‘reliable’ investment. For this reason, blue
chip funds are usually less volatile as compared to other equity funds.
From a broader view, returns gained
on Blue chip fund are expected to be in a same range. As the risk associated
with this stock are to less, on the other hand it has a decent returns.
SBI Blue Chip Fund - Growth Weekly Chart
SBI Blue Chip Fund is classified
as Large Cap Fund Ranked 1 by Crisil. This fund has 84.43% exposure to Equity
followed by some exposure to Money market Instruments.
Portfolio Analysis: The fund is
well diversified in terms of stocks as well as at Sector level with flexibility
of investing up to 20 per cent in mid-cap stocks. The fund is benchmarked to
BSE 100 index. The Top holdings and Sector allocation for the stocks are shown
below.
Top Holdings Sector
Allocation:
|
Sector
|
%
|
|
Banking/Finance
|
22.67
|
|
Pharmaceuticals
|
10.77
|
|
Automotive
|
10.12
|
|
Oil & Gas
|
7.47
|
|
Technology
|
7.17
|
|
Company
|
PE
|
% Assets
|
|
HDFC
Bank
|
24.87
|
7.34
|
|
Reliance
Industries
|
11.69
|
3.84
|
|
Infosys
|
16.87
|
3.81
|
|
Sun
Pharmaceutical.
|
29.02
|
3.53
|
|
HPCL
|
9.14
|
3.01
|
Returns as on 26th August, 2016
|
Period
|
Returns (%)
|
|
1 year
|
14.62
|
|
3 year
|
28.07
|
|
5 year
|
19.92
|
The
fund has also outperformed its benchmark across market phases, but due to its
maximum exposure to Equity instruments this fund is considered risky. However
the investment is into blue chip companies which give a cushion to the risk
associated with the equity markets.
Investment
Rationale: SBI Blue Chip Fund has maximum exposure to Equity but the benefit is that it’s a large
cap fund so the correction should not be much deeper like the small cap stocks.
In order to fetch alpha returns the investors should make staggered investments
and SIP will be the best option as of now!
No comments:
Post a Comment