In India, when it comes to the financial sector, one name definitely stands apart, i.e. the State Bank Of India, and being India’s largest public sector banker is not the only reason that makes them shine bright in the market. So it is no wonder that a business associated with SBI such as SBI Mutual Fund AMC is popular among investors from various walks of life. SBI Mutual Fund AMC operates a joint venture with SBI, India’s leading public sector bank, and AMUNDI, a France-based global leader in the financial sector. Being one of the most popular fund houses currently operating in India, this asset management company offers a range of investment options to retail as well as institutional investors. That said, not all mutual funds from the same fund house enjoy the equal level of popularity. The following are some of the lesser known mutual funds offered by SBI Mutual Fund AMC that are often missed even though they have great potential for generating high ROI for long term investors.
As suggested by the name, this fund is focused on making investments specifically directed at banks and various other financial institutions operating in India. In terms of classification this is best described as a thematic fund, which has on average been providing over 15% returns since its launch in February, 2016. The scheme’s stated objective is to provide investors with capital appreciation in the long term through investments made in a portfolio comprised of equity as well as equity-linked securities of various companies operating in India’s financial space. Historically, the fund has shown a large cap bias with capital allocation to this specific segment exceeding 65%. Additionally, the remainder of the scheme’s capital has historically been invested in mid cap and small cap equities, which have helped this fund maintain robust growth since inception.
The SBI Magnum COMMA Fund has been around for over a decade, having been launched in August 2005. Yet this scheme is one of the lesser known offerings from SBI Mutual Fund probably because of its thematic nature. The SBI Magnum COMMA Fund almost exclusively invests in equities of domestic companies operating in key sectors such as energy, oil and gas, materials, metals and agriculture. Apart from its equity investments, this mutual fund scheme can also invest in smaller amounts in money markets as well as various fixed and floating rate instruments based on market conditions. Historically the fund has maintained a pretty trim portfolio having invested in a maximum of 30 companies at any given time. It is also important to note that the SBI Mutual Fund scheme has historically maintained a large cap bias with such equities accounting for up to 65% of its total investments at any given time.
The SBI Infrastructure Fund, as the name suggests, is involved in making investments into various tertiary sectors of the economy. This SBI mutual fund scheme features the objective of making investments into the equity shares of domestic companies that are either directly or indirectly involved with domestic infrastructure development. Investors should however remember that the fund deems itself suitable mainly as a long term investment solution as being sector specific it is susceptible to short term volatility. In terms of its portfolio, the SBI Infrastructure Fund has a bias towards investing in mid and small cap companies, which is one of the key reasons why this fund has witnessed robust growth during the past couple of years. However, the scheme does have substantial assets in the large cap segment which is one of the key reasons the fund has been able to contain losses better than many of its peers during difficult market conditions. Some of the key sectors this SBI Mutual Fund scheme is invested in include construction, automobiles, communications, engineering and energy.
The SBI Contra Fund is one of the few multi cap schemes from SBI Mutual Fund AMC that have not really caught on among the general public. A key reason for this might be the fact that this scheme seeks out and primarily invests in equities that are currently out of flavor and contrary to what the rest of the market is buying. In other words, the terms “contra” has been derived from “contrarian” that probably best illustrates the style of investing that this fund has historically followed. This unique style of stock selection, allows the scheme to invest in equities of companies that are undervalued as compared to their actual worth and have great potential for long term future growth. Historically this multi cap scheme has followed a sector and capitalization agnostic style of investment, which has helped this scheme generate long term gains through multiple business cycles. Historically, this scheme has featured almost 50% investment in large cap equities, while the rest of this scheme’s capital has been almost equally distributed among mid and small cap stocks.
SBI FMCG Fund is focused on making investment in companies that are either directly or indirectly involved in manufacture and distribution of fast moving consumer goods (FMCG). At present the FMCG sector in India is in its developmental stage, which is a key reason why this mutual fund has strong growth potential as the sector continues to grow in the future. Historically, the scheme has been engaged in making investments into companies that are in the small and mid cap segment, which has been the key driver of this fund’s success in recent times. However, the fund currently also has large cap investments of close to 30% which is expected to grow as India’s FMCG sector undergoes further consolidation and growth in the future.
A closer look at the above mentioned SBI mutual funds would show that these are mainly sector-specific funds and these are prone to high levels of volatility. As a result most of these would be considered as high risk investments that an individual investor would shy away from. This is perhaps the key reason why these mutual funds have some of the smallest net asset values among all equity mutual funds available to Indian investors. But in case you are one among the relatively few investors who understand a sector well, you can post significant gains as long as you time your entry and exit into these schemes correctly.
Comparison of the above SBI Mutual Fund Across key Criteria
|Fund Name||1 Year||3 Years||5 Years||Assets (Crores)|
|SBI Banking and Financial Services Fund||26.59%||-||-||Rs. 468|
|SBI Magnum COMMA Fund||30.06%||16.42%||13.67%||Rs. 350|
|SBI Infrastructure Fund||24.23%||13.12%||13.87%||Rs. 608|
|SBI Contra Fund||23.55%||11.94%||15.96%||Rs. 1854|
|SBI FMCG Fund||35.12%||15.46%||17.87%||Rs. 366|