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. [EasyDNNnews:PaidContentStart]

Reason for recommendation 

Public sector undertaking stocks have shown a tremendous appreciation in the last few years after a long consolidation of over a decade. They will likely continue to do so for some time. Hence, our choice of MF Select this time is SBI PSU Fund. This mutual fund has shown impressive performance across various periods, consistently outperforming its category average. Over the past three months, six months, and one year, the fund has delivered returns of 15.27 per cent, 62.89 per cent, and 94.03 per cent, respectively, surpassing the category average returns. While the fund's performance over five and ten years has been slightly lower than the category average, it still remains competitive. 

The fund's portfolio is heavily weighted towards the energy and financial sectors, comprising 32.7 per cent and 27.55 per cent of the portfolio, respectively. Additionally, significant allocations are made to metals and mining, capital goods, and construction sectors. This diversified sectoral allocation mitigates sector-specific risks and enhances the fund's resilience to market fluctuations. The fund's top holdings include prominent companies such as State Bank of India, Power Grid Corporation, and NTPC Ltd, reflecting a focus on stable and established entities. These holdings contribute to the fund's robust performance and provide a solid foundation for long-term growth. Compared to other funds in its category, this fund exhibits superior risk-adjusted returns, with a Sharpe ratio of 1.53, indicating better performance relative to the level of risk taken. Moreover, its beta of 0.95 suggests a lower sensitivity to market movements, resulting in more stable returns than the category average. As this is a thematic fund, investors with a high risk appetite and longer investment horizon, one should not allocate more than 10 per cent of their portfolio to this fund.

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