Mutual Fund Performance Review: SBI Blue Chip Fund

Published: June 25, 2016 at 8:04 am

Last Updated on

The performance of SBI Blue Chip mutual fund is analysed with the open source excel tools available at freefincal. Mutual fund performance analysis published at freefincal should not be construed as investment advice. It is purely meant as an advertisement for the Excel sheets here 😉

SBI Blue Chip fund is a large cap fund that can dabble with mid-caps stocks and cash to some extent (10-20%).

Having an AUM of 6000+ Crores it is the 5th largest actively managed large-cap with a chequered history. Its since-inception NAV history does not make for pleasant viewing.

SBI-Blue-Chip-Fund-3
Source: Value Research Online.

This can be broken down into two segments (not always possible).

Before Sohini Andani became the fund manager in Sep 2010

SBI-Blue-Chip-Fund-2
Source: Value Research Online.

After Sohini Andani took over

SBI-Blue-Chip-Fund-1
Source: Value Research Online.

The performance has picked up only after the market moving up in anticipation of a single party gaining an absolute majority in the Lok Sabha elections. Yet another reason to be wary of (5) star ratings.

The fund which was pushed to the back pages of the AMC factsheet has suddenly become one of its flagship funds. It has the highest AUM among SBI active equity funds.

SBI Blue Chip can pick stocks from the BSE 100 universe. While 70% of the portfolio at any would in equity, this can be in arbitrage too with a provision to include up to 10% of international securities. Up to 30% can be in cash bonds.

Before we head over to the result, these are links theta cover the basics of rolling returns and and upside/downside captures

Lump Sum rolling returns SBI Blue Chip vs BSE 100 Total Returns Index

Using the Mutual Fund SIP and Lump Sum Rolling Returns Calculators we find

SBI-Blue-Chip-Fund-4

The 3-year rolling returns are quite impressive. The date represents the start of the investment duration.

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SIP rolling returns SBI Blue Chip vs BSE 100 Total Returns Index 

SBI-Blue-Chip-Fund-5

After Sep 2010, the 3-Y rolling SIP performance has picked up.

Risk-return analysis of SBI Blue Chip vs BSE 100 Total Returns Index

SBI-Blue-Chip-Fund-6

Notice although the fund has decent downside protection, it is only recently that the upside capture (outperformance when the index does well) has increased. This is the main reason for the recent good performance.  I think this probably points to better stock selection.

AUM Growth

Personally, I do not like funds which have suddenly become popular (regardless of reason: performance/commissions etc.).

AUM as on

  • Aug 30th 2012 Rs. 686.36 Crores
  • July 31st 2014 Rs.930.58 Crores
  • June 30th 2015 Rs 1,938.83 Crores
  • May 30th 2016 Rs 5,971.80 Crores

That is a huge increase! Bet Jun-15 to May-16 the BSE 100 fell by ~ 2% and the Sensex ~ 3%. So it not because of a ‘buy-high’ mentality.

Conclusion: While  there is nothing wrong with  the fund, but personally it is not a compelling buy for me. If I am looking for a blue chip fund, I would prefer (and hold) an old horse like Franklin Blue Chip. That there is no sensation surrounding it is added incentive.

Note: The before/after fund manager is possible sometimes. I see it more about the AMC waking up  (in this case) rather the ‘importance’ of the fund manager.  If Sohini Andani quits, there is no reason to exit the fund in panic.

What do you think?

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Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
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6 Comments

  1. I sincerely hope that the performance of SBI Bluechip is not solely due to Sohini Andani.

    Just read a post from 2012 in Livemint, “Will SBI mutual fund rise again?”. It describes the problems SBI MF faced during 2006 after most of its reputed fund managers left, because of the inability ‘to retain talent in the investment team’. However, pressure from its sponsors, SBI, forced them pull up socks. “Apart from strengthening its fund management team, the fund house also sharpened its research department; it recently hired a new head of research who, along with Muhnot, put in place processes to ensure that the fund management and the research teams are synchronized. Weekly meetings to exchange ideas—research analyst sharing his takeaways from company meetings he’s had in the past week and fund managers discovering “new ideas”—are taken very seriously, but giving enough space to both the teams.” Looking at the present time, I can see that SBI MF has been able to retain most of its fund managers: R. Srinivasan (since 2009), Sohini Andani (from 2010), Jayesh Shroff (since 2007), Richard D’souza (since 2011). So, it seems that the present condition is pretty stable, however I am still not convinced how much the recent performance of SBI MF schemes is owing the fund management team and how much due to the research team. Because a long term investor, like me, shall not wish to face hiccups like that before.

  2. yes I agree with you. As mentioned in the post, it is more due to the amc waking up rather than due to any one person.

  3. this is why learning about fund managers so imp, other wise invest in ETF Index funds and save the expense costs of 2 to 3 percent.

    1. I disagree. I do not know the names of the fund managers in my funds. The example here only shows an amc pulling up its socks.

  4. Yes sir. I think you are correct, since SBI managing to retain the Fund managers will do beter in future. At the same time I want your analysis on the Sundaram MF. They are also not doing better now a days. Do you have any idea on their performance? Sundaram & Sundaram BNP are same or any difference in the management?

  5. Hi Pattu,
    Basically when you compare between Franklin Bluechip and SBI bluechip, SBI bluechip sometimes deviates to create alpha. Funds like ICICI focused bluechip and Franklin India bluechip fund stick to their mandate and SBI bluechip doesnt .
    Hence it would be wise if SBI bluechip and BNP paribas equity funds are compared. They are similar and apple to apple comparison

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