Fund of Fortnight
This is our mutual fund recommendation. Every fortnight , we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.
SBI Bluechip Fund - Direct Plan
Reason for recommendation-
The equity market has been going through a phase of elevated volatility in recent times. Nifty VIX, which shows what the market is factoring in terms of expected volatility, is trading around at 22, down from 30+. Nifty VIX had remained below 20 for most part of 2021. A lot of uncertainties that clouded the investment market are now in a stage of dispersal. For example, rate hike by the US Federal Reserve and a drastic drop in crude oil price from its recent high among others. Nonetheless, we are not yet out of the woods and in such a situation it is better to stick with market leaders and invest in large-cap funds. The equity market has rallied by more than 8 per cent from its recent low and there could be nothing better than investing in a fund having beta higher than the category. SBI Bluechip Fund is one such fund, which though doesn’t protect downside well, does capture the upside pretty well. Except for the year 2018, the fund has outperformed its category as well as its benchmark on a consistent basis. The fund boosts one of the best Sharpe and Sortino ratios in its category. Although the standard deviation and beta is on the higher end, the alpha generated by this fund has been one of the highest in the last three years. The fund is well-diversified with 57 stocks at the end of February 2022. Its top 10 stocks made up for 47 per cent of net assets at the end of February. The fund looks inclined towards sectors that have underperformed in the last one year. It is overweight on financials and automobile while being underweight on technology, energy and consumer staples. On the stocks front, HDFC Bank, ICICI Bank, Infosys, Larsen and Toubro and Reliance Industries form the top five stocks. Since the fund is high beta, it is only suited for those investors who have an aggressive risk profile and are willing to remain invested for at least two years.
