SBI Mutual Fund announced 19th anniversary of the SBI Focused Equity Fund on September 25, 2023. Investors who had invested Rs. 1 lakh during the scheme’s NFO in September 17, 2004, have witnessed it grow to an impressive Rs. 26.88 lakh, at compounded annual growth rate (CAGR) of 18.91 per cent, the fund house said.
SBI Focused Equity Fund does this by concentrating on a high-quality stock portfolio, allowing for extensive research and active management to capitalise on growth opportunities, the fund house said. The portfolio has investments in 22 companies.
So what is a focused equity fund?
According to Sebi guidelines, focused funds can invest in limited number of stocks, with a maximum of 30. These funds have the flexibility to invest across market capitalisations and sectors. Equity and equity-related instruments must constitute at least 65 per cent of total assets.
These funds prioritise diversification across sectors and sizes, maintaining a balanced and avoiding excessive concentration in any one sector. Fund managers enjoy greater discretion in asset allocation, as there are no restrictions across market capitalisation. In the past year, SBI Focused Equity Fund delivered a return of 11.90 percent, while over a 3-year horizon it yielded 24.06 percent return, according to AMFI data.
SBI MF said that its focused fund yielded an alpha over its benchmark. Those who invested through SIPs, a 10-year SIP would have delivered a CAGR of 15.66 per cent, surpassing the benchmark's (S&P BSE 500 TRI) 15.3 per cent. If an investor had invested Rs. 10,000 every month since inception, the investment of Rs. 12 lakh would have grown to Rs. 26.93 lakh, SBI Mutual Fund said.
Similarly, a 15-year SIP provided a CAGR of 17.42 per cent, outperforming the benchmark's 14.59 per cent. An investment of Rs. 18 lakh (Rs 10,000 every month) would have grown to Rs. 75.18 lakh.
These funds prioritise diversification across sectors and sizes. As of August 31, 2023, SBI Focused Equity Fund's Assets Under Management (AUM) stood at Rs. 29,430.33 crores, diversified across 22 companies. The top sectors include Financial Services, FMCG,
Telecommunications, IT, and Healthcare, comprising 70.71 per cent of the portfolio. The highest allocation goes to financial services industry at 32.29 per cent.
Out of the 26 focused funds listed on AMFI, the category has delivered an average return of 14.55 per cent in the past year and an impressive 24.15 percent over the past 3 years.