SBI Bluechip Fund Review: Can this outperform Nifty 100?

SBI Bluechip Fund Review

Published: October 13, 2019 at 12:09 pm

Last Updated on

This is a performance review of SBI Bluechip Fund. Started in Feb 2006, it has grown to become one of the biggest large cap funds with 22746.36 Cr as on 30 Sep 2019, much of it in recent years. Does it make sense to invest in this fund anymore or shift to a Nifty 50 index fund? Let us find out.

From May 2018, the fund’s investment mandate became tighter. Earlier it had no specific restriction on market cap, although it was primarily a large cap fund. It could invest in bonds up to 30%. Now, 80% of its portfolio from the top 100 stocks by market cap.

Before we begin, this is an anonymous simple “Yes/No” poll on financial challenges associated with planning for our children’s future. Kindly participate. Would appreciate an RT. Will share results after 300 responses. You can get some context for the poll in this video: Have children? Planning for one? Planning for another kid? Then you better plan in advance! Also this article: How I Helped a Young Nuclear Family Invest For Their Children’s Future

According to AMFI, 69% of the AUM comes from the regular plan, growth option, 5% from regular plan dividend option, 24% from direct plan growth option and 2% from direct plan dividend option.  For an AMC associated with a bank, the 26% direct contribution is impressive.

The scheme follows a blend of growth and value style of investing with a  combination of a top-down and bottom-up approach to stock-picking strategies. In a top-down strategy, the fund manager will consider the stock only after evaluating the sector and the economy. In a bottom-up approach, the stock will be considered first.

In Dec 2018, I had reported that Only Five Large Cap funds have comfortably beat Nifty 100! SBI Bluechip Fund was one of them.  So the fund has a good track record in spite of the swell in AUM. The questions are, (1) was it because investing outside the index? (2) Will it be possible to maintain this in future? Let us dig deeper.

SBI Bluechip Fund: Basic Scheme Details

TypeOpen-ended scheme
AssetEquity
CategoryMarket Cap Fund
Sub CategoryLarge Cap Fund
Inception Date14-02-2006
Fund ManagerSohini Andani
ObjectiveTo provide investors with opportunities for long-term growth in capital through active management of investments in a diversified basket of large cap equity stocks (as specified by SEBI/AMFI from time to time).
Minimum Investment5000
Incremental Investment1000
Exit LoadFor exit within 1 year from the date of allotment 1%
allotment – 1 %
allotment – 1 %; For exit after 1 year from
the date of allotment – Nil
AUM (30-Sep-2019)22742.5027 (Cr.)
Expense Ratio1.07 Direct 1.89 Regular
BenchmarkS&P BSE 100 – TRI (Benchmark)
Additional BenchmarkS&P BSE SENSEX – TRI (Benchmark)
Investment PatternMinimumMaximum
Debt instruments (including securitized debt)020
Equity and equity-related instruments of large cap comp (including Derivatives)80100
MMI020
Other equities and equity-related instruments020
Units issued by REIT/InVIT010

Expense Ratio and AUM History

Expense ratio and AUM history of SBI Blue Chip FundNotice the bid dip in the direct plan expenses? Between Jan-Mar 2016 and Apr-June-2016 the direct AUM of this fund grew by 83%. Hence the AMC promptly jacked it up. Question is, why the direct plan expense come down gradually in the first place? It looks almost as if the AMC anticipated this influx into direct plans, made the fund invited and increased it later. Remember they did not have to intimate this to investors at that time.

Asset Allocation History

The fund has maintained close to 90% exposure in stocks for much of its history (although it had the mandate to operate as a balanced fund with up to 30% bond exposure before May 2018)

SBI Bluechip Fund Asset Allocation History

Market Cap History

Notice the gradual decrease in small cap exposure and mid cap exposure. This the main reason many believe that going forward large cap funds may not be able to beat the index.

Hate ads but would like to support the site? Subscribe to our ad-free newsletter and get beautifully formatted full articles delivered to your inbox!

Market Cap History of SBI Bluechip Fund

SBI Blue Chip Fund vs Nifty 100 TRI

Let us check how the fund has fared against Nifty 100 (equivalent to BSE 100) over every possible 3, 5, 7 and 10 year periods. The number of returns considered is indicated in the plots.

SBI BlueChip Fund Rolling returns over 3 years

SBI BlueChip Fund Rolling returns over 5 yearsSBI BlueChip Fund Rolling returns over 7 yearsSBI BlueChip Fund Rolling returns over 10 yearsThe fund did not do too well in the first few years after inception during the sideways market post-2008 recovery. It did well the market picked in late 2013 but performance has again been muted in the last couple of years (this is true of many of its peers).

Can this outperform Nifty 100?

Its volatility has always been lower than that of Nifty 100, but the return performance is not consistent enough. Naturally, we cannot predict if it will outperform Nifty 100 in the future with or without this data. However, a good track record allows us to take that chance.

I am afraid this (or most other active large cap funds) do not have such a record. Even when these funds were not restricted by the SEBI, they had trouble beating Nifty 100 (or Nifty). This is the reason I do not recommend active large cap in my handpicked List of Mutual Funds October 2019 (PlumbLine).

SBI Blue Chip Fund vs Peers

Shown below is the rolling returns comparison of SBI Bluechip with ICICI Bluechip and Nippon India Large Cap (Reliance Large Cap, previously Reliance Top 200).

SBI BlueChip Fund vs peers Rolling returns over 7 yearsSBI BlueChip Fund vs peers Rolling returns over 10 yearsOne cannot really say if X or Y fund is better.

Summary: Should you invest?

No. New investors should give this fund a miss and stick Nifty 50 and Nifty Next 50. For example see: Combine Nifty & Nifty Next 50 funds to create large, mid cap index portfolios. Old investors should also consider a gradual shift to either index fund or aggressive hybrid or multi-asset or balanced advantage funds

Do share if you found this useful
Hate ads but would like to support the site? Subscribe to our ad-free newsletter and get beautifully formatted full articles delivered to your inbox!

About the Author

M Pattabiraman author of freefincal.comM. 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 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.
He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. For speaking engagements write to pattu [at] freefincal [dot] com

About freefincal & Content Policy

Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. We operate in a non-profit manner. All revenue is used only for expenses and for the future growth of the site.
Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any kind of paid articles, promotions or PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)

Connect with us on social media

Our Publications


You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingMy first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.  It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantGamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantMy second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)  

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

Comment Policy

Your thoughts are the driving force behind our work. We welcome criticism and differing opinions.Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *