SBI Bluechip Fund Analysis

SBI Blue Chip Fund invests in stocks of bluechip companies i.e. in stocks of companies with market capitalization equal to or more than the least market capitalized stock of BSE 100 Index.

It is an Open-Ended Growth Equity Fund launched in Jan 2006. The Benchmark index is S&P BSE 100. As of Dec 2015, the Asset Under Management (AUM) is Rs 2741 crores. To know more about the Fund Facts read this.

SBI Bluechip Fund G, being an equity oriented fund is primarily invested in stocks (90%) across 13 sectors, with balance debt, cash and cash equivalents. To know more about its composition read this.

The Top 5 Holdings of SBI Bluechip Mutual Fund are as below.

  • HDFC Bank
  • Sun Pharma
  • Infosys
  • Reliance
  • TCS

Together they account for 25.5% of the funds corpus.

Methodology of the Analysis

First I obtained daily NAV data of SBI Bluechip Equity Fund from 2006. The data is from Feb 2006 to Mar 2016. I downloaded the data from SBI Mutual Fund website here.

Then I estimated the rolling 1 year, 2 years, 3 years, 4 years, 5 years, 6 years and 7 year returns.
After that, I calculated a number of simple but informative statistical formulas on the returns data.
– Average, Maximum and Minimum Returns.
– Standard Deviation – This gives us an indication of the variability of the data.

SBI Bluechip Fund – 1 Year Returns Analysis

SBI Bluechip Fund Review - 1 Year Returns

Average 1 year rolling return is 16%. However standard deviation is a massive 30%, which indicates a huge variability.

If we were to assume that the returns are normally distributed, then we can conclude the following.

  • There is a 68% probability that returns could be between -14% and 45% in any 1 year period which is not at all helpful.
  • There is a 95% probability that returns could be between -44% and 75% in any 1 year period.

Conclusion: In other words anything can happen in a 1 year period. There is no predictability.

SBI Bluechip Fund – 3 Year Returns Analysis

SBI Bluechip Fund Review - 3 Year Returns

Average 3 year rolling return is 11%, which is 5% lower than 1 year returns. However standard deviation has now come down 2/3rd to 10%, which is still on the higher side.

If we were to assume that the returns are normally distributed, then we can conclude the following.

  • There is a 68% probability that returns could be between 2% and 21% in any 3 year period.
  • There is a 95% probability that returns could be between -8% and 30% in any 3 year period.

Conclusion: Although an improvement over 1 year rolling returns, there is still a lot of variability.

SBI Bluechip Fund – 5 Year Returns Analysis

SBI Bluechip Fund Review - 5 Year Returns

Average 5 year rolling return is 10%, lower than 3 years average rolling returns of 11%. However standard deviation has now come down further to 6%.

If we were to assume that the returns are normally distributed, then we can conclude the following.

  • A person who invests in SBI Bluechip Fund (G) can say with 68% certainty that he would make at least 4%, which is comparable to Saving Account rates. On the positive side, he could make as much as 16%.
  • There is a 95% probability that returns could be between -3% and 22% in any 5 year period.

SBI Bluechip Fund – 7 Year Returns Analysis

SBI Bluechip Fund Review - 7 Year Returns

Average 7 year rolling return is 10%, almost same as 5 years average rolling returns. However standard deviation has now come down further to 3%, which is manageable.

If we were to assume that the returns are normally distributed, then we can conclude the following.

  • There is a 68% probability that returns could be between 7% and 13% in any 7 year period, which is very mediocre.
  • What this means is that if one were to invest in SBI Bluechip Fund and Hold it for 7 years, one would get at least get returns similar to a bank FD. On the plus side, one could potentially make as high as 13%, which while not high, is still decent.
  • In any 7 year rolling period, there is a 95% percent chance that the lowest returns would be 4% with a high of 17%.

Conclusion

  • Predictability of returns of SBI Bluechip Equity Fund seems to increase with increased holding period, accompanied by a reduction in variability.
  • Long term returns (7 years) for this fund has been around 10%, with a maximum of 21% and minimum of 3%, which is a very mediocre number. However, such performance might not repeat in the future.
  • SBI Bluechip Fund G has underperformed the market (CNX NIFTY).

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A Few Last Words

Before making any investment decision, please contact your financial adviser.

I do not own SBI Bluechip Equity Fund.

I am not registered with SEBI under SEBI (Research Analysts) Regulations, 2014. I do not offer any opinion concerning securities or public offers. Whatever analysis I provide is through public media only on Mkerj. I am not covered under RA Regulations.

I have provided this article for educational purpose only.

I hope you found this article on SBI Bluechip Fund Analysis useful. If you have something to add please leave a comment in the post. Please feel free to contact me.

Subhodeep Mukhopadhyay

I am a Management Consultant in the Education Sector. In my previous corporate career, I have worked in Banking, Private Equity and Software industry. I am an MBA in Finance/ Computer Engineer and enjoy doing equity research and financial analysis in my free time.

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